Fair Trade Crude Utopian Dream or a Plausible Scenario?

Crude oil fueling conflict parties should be declared as an illicit good and no longer be traded on global markets. Scrutinized by a vigilant world civil society, a centralized supervisory authority backed and legitimized by the United Nations would enforce this regulation and leave rebel groups, militias and criminal organizations cut off from their cash flows. Would such a mechanism uncouple resource wealth and civil war or is that merely utopian thinking? Although todays leading scholars such as Ross, Le Billon, Margonelli, Fearon or Dunning & Wirspa, pursuit different lines of arguments, choose different ways to structure their main ideas, and somehow vary in their interpretation of the subject matter, none of them denies that there exists a complex nexus between resource wealth and the emergence of civil wars.

Whereas Ross aspires to identify (and detects) a multitude of empirically convincing causal mechanisms that link variables and therefore constitute the relations between natural resources and violence, Le Billon emphasizes the significance of historical processes of social construction shaping a political ecology of war and approaches the topic by analyzing the role of natural resources through their materiality, geography and related socio-economic processes. In this context, Le Billon convincingly shows how historical processes such as the end of the Cold War or the liberalization of international trade and privatization of formerly state-operated security services, constituted a fertile ground for the establishment of political ecologies of war nourishing themselves among others - from the exploitation of natural resources. In his eyes, resources are not, they become. Thus, it would be wrong to identify the availability in nature of any resource itself a predictive indicator of conflict. Dunning & Wirspa, however, stress the fact that (especially) oil exploitation is simultaneously national as well as multinational and explanations of the occurrences of related civil wars must therefore necessarily consider economic motivations that are specifically related to the intensification of transnational commerce in recent decades and to the political economy of violence inside a particular category of states. Furthermore, the two authors unveil full-fledged national interest of consuming states to participate in that murky business in order to ensure the security of their energy supplies. Fearon, for his share, falls into line with Ross and urges an empirical perspective in order to reduce the complexity and break the nexus into conceivable causal relations. Differently from Ross, however, Fearon goes one step further and derives concrete political implications from his results. Going without empirical studies, Margonelli chooses a rather descriptive approach carried out in a form of a travel log and seizes diverse problematic issues of todays Nigeria. By doing so, the author gives the reader a great understanding of the realities on the ground.

Fair Trade Crude Utopian Dream or a Plausible Scenario?

Despite these diverse approaches and the related extensive body of explanatory literature, when it comes to concrete recommendations for action, the authors seem to be less ambitious. However, while studying the literature, two (somehow similar) broad concepts of policy implications become apparent: Whereas Fearon proposes a centralized external international monitoring system supervising the use of revenues arising from the exploitation of natural resources, Le Billon rather identifies a responsibility of the industry itself to ensure that no commodity ending up on the international market has participated in funding conflicting parties. Independent of the respective control mechanisms implemented, in both ways it seems obvious that the transformation of looted commodities into legally sold goods should be prevented.

On the basis of these two approaches, I want to develop some thoughts further and suggest that fair trade certificates as utopian it might sound, could serve as a mid- or long-term measure to uncouple the extraction of natural resources from warfare.

Being in line with this finding, Ross states that while oil, nonfuel minerals, and illicit drugs appear to influence conflict, other types of primary commodities notably legal agricultural commodities seem to be unrelated to civil war. How does that square with the claims of Fearon and Le Billon? I argue that the legal character of a specific good plays a crucial role whether it is potentially abused as a source of financing conflicts or not. However, in order to understand the character of commodities such as oil, we should strive for a broader understanding of the term illicit. Different from drugs or ivory, oil isnt an illicit good as such. What makes oil illicit (at least in some cases), however, - is the way it is extracted and transported. Therefore, in this context illicit should rather be understood as insufficient in complying with given principles of responsible and sustainable social, political and economic behavior.

In view of this worrying evidence, one may ask himself if you ever thought about the origins of the gasoline fueling your car or the crude used to manufacture our clothes. Although our economies are mainly based on oil and the natural resource is omnipresent in our todays society, I argue that consumers do care much more about just trading conditions of coffee beans and bananas than about the origins of crude oil. What could be reasons for that? One reason for that, I guess, is that oil is rather associated with associated with environmental pollution than with conflict and war. Another reason and probably the causing matter behind the just mentioned biased perception is the lack of a broad consumer awareness of the close affiliation between oil and violence.

Fair Trade Crude Utopian Dream or a Plausible Scenario?

Of course, one might rightly argue that crude and bananas are not comparable at all, pointing at the fact as most of the scholars do (see Le Billon for example) that while the extraction of crude requires rather relatively little labor force, cultivating a banana plantation implies a fair amount of work. Moreover, it seems obvious that the structure of the markets for oil and bananas, as well as the margins and the rents produced, vary strongly. Besides, it seems clear to me, that oil given our todays technologies - as a highly inelastic good is hardly comparable with a highly elastic good (at least in western societies) such as a tropical fruit. Nevertheless, no one can seriously argue, that both goods wouldnt have something in common: If no western consumer would buy those goods, in both cases, the producers wouldnt be able to sell their products and thus there wouldnt be no rents produced at all. This argument implies, that whether an illicit good is sold on the world markets or not, depends in a large part on the consumers willingness to buy such a good or not. Indications for such direct ties between western consumers and warring parties can also be found in the works of Le Billon or Dunning & Wirspa.

However, important questions remain unanswered: What would be the effects of such certificates and who could ever implement resp. enforce such a system?

Assumed that fair trade certificates would similar as seen in markets for other goods - lead to higher consumer awareness of the subject matter (hopefully) reflected in a higher willingness to pay for fair and sustainable produced crude, the system would set a strong incentive for oil producing companies to address inconsistencies in their supply chains. In order to secure their market shares, private corporations, either domestic or international, would be forced to assume their political role and to take a moral stand by demonstrating their citizenship, as Le Billon puts it. While the prices for crude would be likely to increase in the short-run after the implementation of such a certification system, in the mid- or long-run the price level is likely to return to normal or due to lower expenses of the producing companies for security forces and bribe money even decrease. Since one can assume that peace and stability are some of the United Nations core interests, the international community should be willed to take the lead and set up an independent agency controlling and labeling the oil sold on the world markets. In order to accomplish such a daunting task and assure the verisimilitude of the issued certificates, it would of course be necessary to trace the respective origins of the crude brought to the world market. An extensive central registry, who classifies the precise chemical composition of all the spouters worldwide combined with specifically taking samples of the products offered on the markets, could be instruments to overcome this set of issues.

Fair Trade Crude Utopian Dream or a Plausible Scenario?

Provided the system would work, consumers states could set up pressure by instrumentalizing consumer awareness and forcing producer states to assume more responsibility, instead of launching military interventions in order to secure an appropriate oil supply. On the other hand, producer states presumed that they are willed and able to translate the installed incentives into action could detach from foreign interventionism and cut off subversive rebel groups from their cash flows. Being aware that this would certainly be the toughest ambition to achieve, the system hinges on the question whether the frequently weak governments of the producing states backed with full support of the international community of states would be able to assume higher accountability for the goings-on in their country.

Of course, the above deliberations may present a very simplistic view on the subject matter and one may rightly claim that - after all - it has not much to do with the realities in the todays oil industry. However, the aim of the present paper was not to present an in-depth analysis or even to present a plausible solution to the problem. This would of course go far beyond the scope of that paper. Instead, the thoughts developed above should rather be seen as a starting point for further research and creation of new, innovative and market-based approaches towards peace-keeping and statebuilding.