A Chinese Resource Curse?

Guest post by Julia Bader and Ursula Daxecker

Is China’s oil diplomacy worsening human rights in resource-rich states? Consider Venezuela. It sits on some of the globe’s biggest oil resources. Almost all of its export revenue comes from oil, creating payment difficulties given currently low oil prices. Street protests against rising crime rates, corruption, and scarcity in basic consumer goods last year were violently suppressed. While the Obama administration has shunned Venezuela for these human rights violations, China recently provided another $5 billion loan on top of $50 billion in oil-backed loans committed in previous years. Observers have criticized Chinese engagement in Venezuela and other oil-rich countries such as Sudan, Angola, and Iran, asserting that Chinese oil exploration contributes to human rights violations.

Many of Venezuela’s problems are symptoms of the well-known resource curse. Windfalls from resource wealth limit the need to tax their citizens. This lack of accountability to citizens contributes to states’ vulnerability to rent-seeking and corruption. Research has linked state weakness, authoritarianism, and corruption to higher levels of repression. States also use resource income to directly finance repression and buy off dissent.

In addition to governments violating human rights, NGOs have documented the complicity of oil corporations in repressive behavior. Oil corporations have been implicated in violent conflicts around land use, the distribution of oil rents, and the management of environmental disasters in Nigeria, Colombia, Myanmar, or Sudan.

These bleak implications of the resource curse makes one wonder whether Chinese oil diplomacy contributes to human rights abuses. China’s foreign policy, known for non-interference in the domestic politics of other states, explicitly dismisses human rights considerations in its oil procurement strategy. Human rights violators such as Iran have therefore offered Chinese companies attractive deals in the oil industry in hope for protection against UN sanctions.

Yet as a latecomer to global oil markets, Chinese oil deals tend to come with local benefits: they are often accompanied by generous soft loans, investments in non-oil sectors, and infrastructure projects necessary to gain a foothold in a tight global market. For all the criticism directed their way, Chinese investments and infrastructure provision such as roads and railways could reduce poverty and improve human rights indirectly through economic development.

Returning to Venezuela and other countries mentioned above, the evidence shows a mixed bag. As the figure below shows, a decline in human rights protection in Venezuela after 2009 seems to coincide with increasing per capita oil exports to China, yet earlier decades show no clear trends. Increasing dependence on China in Iran also shows a decline in human rights protection. For Angola, however, the association between dependence on China and human rights is positive, and no clear association is apparent for Sudan. What, then, is the average impact of Chinese policy upon rights?

(Figure: Per capita oil exports to China and physical integrity rights. Data Sources: UN COMTRADE and CIRI Human Rights Data Project)

In a recent article, we examine human rights performance in states exporting to China to those exporting to the US, another major importer. Contrary to the conventional wisdom, we find that countries dependent on exports to the US have worse human rights records than those exporting to China. Why?

We argue that the timing of market entry explains why US export dependence has more detrimental effects. The US established relations with repressive oil exporters in the Middle East in the 1920s, predating its commitment to democracy and human rights in foreign policy. Given the importance of oil as a strategic geopolitical resource, rhetorical commitments to democracy have few implications for US oil procurement practices.

Even at the corporate level, Chinese importers are not necessarily worse than Western oil corporations with regard to human rights. Although repression and censorship in China may substantially mitigate consumer pressure, Chinese companies are no less committed to human rights in their Corporate Social Responsibility strategies than are their Western counterparts. And while China’s oil exploration in civil war countries – such as Sudan – has received lots of attention, Western oil corporations have in the past abandoned oil sites only in exceptional circumstances. Consistent with our findings, US oil suppliers are on average more politically fragile, which can make them prone to human rights violations.

In short, similar to other research questioning China as a threat to Western liberal order, the narrative on China’s oil diplomacy and its harmful effects warrants reconsideration. While resource curse effects may well materialize for Chinese exporters in the long run, they currently perform no worse on human rights than states dependent on oil exports to the US.

Julia Bader is Assistant Professor of International Relations at the University of Amsterdam. Ursula Daxecker is Assistant Professor of International Relations at the University of Amsterdam.