Tag: geopolitics

The Importance of 1979 in World History

Posted on by fqzhang

When we think of the most important events of the past 100 year, certain years are particularly crucial in determining the course of history. Among the most important are those that marked the end of a period of conflict and the beginning of a new era of peace, namely: 1918/19 (End of WWI, Peace of Versailles), 1945 (End of WWII, beginning of the United Nations), and 1989 (end of the Cold War and the new era of globalization). However, for this blog, I would like to point to one lesser known year that marked not only the end of a period of conflict or start of peace, but also the beginning of a new period of global interactions, which, for better or worse, still shape the world we live in today.

Why 1979?

In the year 1979, several major events occurred around the world. I will list them by geographic region (East Asia, the Americas, and the Greater Middle East, in no particular orders of importance), and then discuss the impact of each of these events.

In East Asia:

The events in East Asia revolved largely around what China had done during that year. Two important event occurred:

  • China’s economic reform and opening up: In December 1978, during the 3rd Plenary Session of the 11th Central Committee of the Communist Party of China, a national meeting of China’s policy-makers, a new national political and economic policy was implemented. First, the meeting confirmed the role of Deng Xiaoping as the undisputed leader (or “Paramount leader”) of China. Deng had been well known as a reformer who wanted to implement changes to China’s bureaucracy and the way the economy was run. Secondly, in part due to the first, a new national economic policy was set whereby a new model of economic organization was first introduced in the countryside (the Household Responsibility System), and leading to a dramatic increase in agricultural productivity and output. These reforms marked the first stages in the transformation of China from an economic backwater into one of the fastest growing economic entity of the past 35 years.china's reform and opening up
  • China and Vietnam fought a brief border war: The Sino-Vietnamese war of 1979 (or the Third Indochina War) was nominally fought over the Vietnamese invasion of Cambodia, whose Khmer Rouge government was supported by China, and at least launched in part by China to test Soviet resolve in defending its Vietnamese ally. However, the real significance of the war was not in the conduct of the war itself, but rather what the war represents. First, the conflict was the last conventional war in East and Southeast Asia. After a series of on-and-off conflict among East Asian nations from 1931 (when Japanese forces first invaded China) to 1979, the nations of East Asia is finally at peace with one another. During this period, the clashes of a variety of ideologies such as militarism, colonialism and anti-colonialism, national and ethnic nationalism, and finally communism all served to fuel a state of continuous conflict in the region. The end of the conflict also marked the beginning of a period of rapid economic growth for not only China, but also for other nations of Southeast Asia. The trajectory of East Asian history was forever altered after 1979.china-vietnam-war

The Americas:

The role of the United States during this time period cannot be exaggerated. It was the world’s foremost economic power; and by most measures, the world’ leading military power as well. The economic difficulties experienced by the United States during the latter half of the 1970s can be explained as an economy in transition from an export-oriented industrial economy to one based on services and high-tech information, along with a significant rise in imports for manufacturing goods. Nevertheless, the United States faced two difficulties as its economic output continues to grow, all with respect to energy:

  • The Second Oil Shock: In 1973, the United States experienced what is later termed the First Oil Shock, whereby, due to a confluence of factors such as a tightening of the oil market (where supply is barely keeping up with demand), instability in the oil producing regions, and finally an outright embargo on the part of the OPEC (Organization of Petroleum Exporting Countries) against the United States for its role in supporting Israel, led to a massive increase in the price of oil. However, this Second Shock of 1979 was due to quite different causes. The Iranian Revolution (to be discussed below) led to a sudden increase in the price of oil as several million barrels of oil were removed from the market. This event helped to trigger a recession in the United States, along with significant political fallouts for President Carter and the Democratic Party, and marked the rise of conservative, neoliberal thinkers in economic circles (The Chicago School of Economics, mot vocally represented by Milton Freidman). Moreover, the Oil Shock leads to increasing financial instability in the US and Europe, and helped to make an already fragile economic situation even worse by introducing an element of inflation along with economic stagnation into the economy.oil shock
  • The nuclear meltdown of Three Mile Island: The nuclear accident at Three Mile Island (a partial meltdown) was another significant event in the energy landscape of the United States in 1979. The accident, while not particularly significant in terms of destruction or radioactive materials released, did lead to a change in perceptions in the public eyes on the issues of nuclear power. This event helped to energize the environmental movement on the issue of nuclear power, and eventually this led to a freeze on all new nuclear power plant construction in the United States. Nuclear energy, which had seemed so promising to many Americans as a reliable source of energy, had now been relegated to the fringe. Another consequence of this event is the increasing dependence of the United States on petroleum as an energy source. Increasingly, the United States began to intervene on a larger scale in oil-exporting regions to ensure that a reliable source of energy supply does not become a problem for the United States.Three Mile Island

Greater Middle East:

  • Soviets invaded Afghanistan. The Soviet Union, through the invasion of Afghanistan in support of the Afghan communist government, in effect launched a series of chain reactions that had the most profound consequences today. First and foremost, the Soviets hastened its own collapse by expending an extraordinary amount of resources (something that it cannot afford due to its fragile economic situation), in both manpower and money. In addition, the image of the Soviet Union as offering an alternative to the “imperialism” of the United States was destroyed, and its influence in the world stage declined drastically. More importantly for the trajectory of world history, the conflict generated a huge response across the Islamic World, in both fighters and money, in support of the “holy war” conducted by the resistance fighters (known as the mujahedeen) to the Soviet Union. Over time, the conflict takes on an increasingly religious nature, where it is seen by many Muslims as a conflict to end the oppression of the Afghan people. Thus, Political Islam in its modern form was born. Another event also took place during the latter half of the conflict which have strong ramifications today. Among the thousands of young foreign Jihadists was a young man by the name of Osama Bin Laden. Indeed, it is in Afghanistan that Al-Qaeda first started. It is important to note the name Al-Qaeda translates as “The Base”, the base by which Islamists in Afghanistan organized themselves and fought against Soviet aggression.Soviet invasion of Afghanistan
  • Islamic extremists took control of the Grand Mosque of Mecca: In late 1979, religious militants took over the Grand Mosque of Mecca and openly challenged the Saudi family’s religious authority. (The Sauds have claimed in their title that they the “Custodian of the Two Holy Mosques.) Later, Saudi security forces moved in and forcibly cleared out the insurgents, resulting in hundreds of causalities. The event, played out on televisions in the Arab World, shocked many who watched it. At the time, many in the Islamic world, from Philippines to Turkey to Pakistan, blamed the United States and Israel for this attack, which in turn led to massive demonstrations, including the burning of US embassy in Pakistan and Libya. The perpetrators were dealt with harshly, and all 68 rebels were captured and beheaded. However, what is truly significant about this event was that the role of religious authority in Saudi Arabia did not diminish after this attack. Instead, the religious conservatives were given more power. In order to appease the religious scholars and social conservatives, the Saudi government turned toward religion to uphold their own legitimacy. Religious schools became more prevalent; the social roles of women were cut back, and in some cases were removed from public altogether. After 1979, Saudi Arabia increasingly became a religious theocracy, with profound influence on the rise of Political Islam.Saudi Mosque seizure
  • Iran’s Islamic Revolution: The final event in the Middle East that is crucial to our understanding of the year 1979 was the conservative Islamic revolution in Iran. By the end of 1978, the government of the Shah of Iran was in its last throbs. The question facing many Iranians was not whether or not the Shah should go, but rather, what sort of government should replace it. The solutions were far ranging, from the Tudeh Party (Communist Party of Iran) to religious ultra-conservatives. While the average Iranian was debating and fighting among those alternatives, the Shah suddenly left the country and left a large power vacuum in a country where the heavy hand of the state had been ever present. Into this power vacuum, an exiled religious teacher – Ayatollah Ruhollah Khomeini – made a landing in Iran. The masses suddenly found a leader that they can unite themselves around, and within weeks, a religious theocracy, as though something coming out of the Middle Ages, was born. The Ayatollah possessed hatreds towards many groups around the world – communists (both inside and outside the country), Israel and the Zionists, and above all, the “Great Satan” in the form of the United States. This hatred only increased over time as he gained more political power. The impact of the Revolution can be seen immediately, from the Iranian Hostage Crisis with the United States to the inauguration of the decade long war with Iraq, all stemming from this watershed event of the Middle East.Islamic revolution in Iran

Now that we have come to the end of our list of major events of 1979, I would like to make note of a few more things:

First, even though in this article I have treated world events as separate in their geographic scope, in reality, all of these events are intimately connected and one often feeds off the other. For instance, American dependence on foreign oil increased just at the same time as Iran’s Islamic Revolution, which removed several million barrels/day from the world market; the fuel crisis of 1979 was certainly worsened by the conflicts in the Middle East. No event in the world took place in isolation, and each one influenced and shaped the outcome of the other.

Secondly, due the scope of this article, I am unable to discuss many of the important events in detail, but they are often important in their own right. 1979 was a year of many changes, yet it has frequently been ignored by many who are not as familiar with world history. I hope that through this article, I can at least spark some interests among my blog readers in the world around us, and view current events through a historical lens.

Finally, the history of the world since 1979, the fall of the Berlin Wall, the War on Terror since the early 2000s, the economic rise of China and increasingly East Asia as a whole, the challenges and benefits of globalization, all directly or indirectly traced their root to the tumultuous year of 1979. In many ways, the events of 1979 is still influencing the world around us, and we are still living in its shadows. 1989 Fall of the Berlin Wall

Good versus Evil: international relations through American eyes

Posted on by fqzhang

Recently, I finished reading of the biography of Kissinger by Walter Isaacson. Isaacson is an excellent biographer (he had completed biographies of Benjamin Franklin, Albert Einstein, and more recently, Steve Jobs.), who brought out the best of Kissinger and his brand of diplomacy. But what intrigued me the most is its comment on the way that Americans have historically viewed conflicts between nations; as a battle between Good and Evil. Invariably, the American nation saves the world from fascism, militarism, and during the Cold War, communism. This lens of good versus evil is how many Americans have historically viewed the role of the United States in the world.

This have lead me to think about issues of international relations based on this perspective. What is it like to apply this “Good versus Evil” mentality to the world stage? Does this sort of thing apply today, and is there an “evil ideology” or foreign entity that sought to overturn American democracy?

As mentioned before, Americans have traditionally viewed the world through black and white lenses, nations are either good or bad with scarcely any shade in between. As problematic as this may seem firsthand, in fact throughout America’s history, this has not presented problems for its foreign policies. Historically, American foreign policies have shifted between isolationism (it appears currently, we are in a state of isolationism, after years of conflict in Afghanistan and Iraq), and advent internationalism. In periods of Internationalism, we as Americans tend to think of the world as suffering from an evil that we must save the world from. And throughout much of America’s engagement with the world at large, the enemy does seem evil or capable of inflicting great damage and cruelty; and in the early 20th century at, does appear to be in great danger. I will list a few examples below:

  • Spanish American War: Spain’s oppression against the people of Cuba is indeed extreme, and American intervention (whatever the cause or intention) does succeed in removing the brutal Spanish rule
  • World War I: American involvement in the war can be thought of as to end a genocidal conflict resulting from extreme nationalism. So while it might not be a “War to end all wars”, it did end a bloody one more quickly than it might have been otherwise
  • World War II: This war is the classic example of the American view of Good versus Evil. Nazism’s evil influence cannot be disregarded or downplayed; without American intervention, it is doubtful that most of Europe and Asia will be free from the tyranny of German or Japanese rule.
  • Cold War: the menace of the Soviet Union in Europe cannot be exaggerated, even though, of course, no shooting war actually took place. American presence and intervention indeed secured many governments from revolutionary forces who would have had devastating consequences. (As to what the right-wing governments that the American government had done, that is topic for another day.)

Historically, both foreigners and Americans have characterize American role in the world in such terms as well. David Lloyd George, the prime minister of Great Britain who represented that country at the Paris Peace talks after World War I, even refers to Wilson as Jesus Christ. Ronald Reagan, the American president, referred to the conflict with the Soviet Union in Biblical terms, referencing the war od Gog and Magog.

When applying these ideas to the world at large, this meant that Americans intervened in the world stage after it is convinced that the enemy is evil (of course, there are other considerations as well, but the portrait of the enemy as evil is one of the chief reasons for the intervention, at least that’s the public perception of it).  Nations could be in ranked in the world on a line of good to evil, and nothing captured this better than the label “Axis of Evil” initially applied to Iran, Iraq and North Korea, applied by president Bush and Secretary Rice during their time at the White House.

The reality of the world is far more complex of course. Many nations are what can be called “Freemies”, not exactly friends, but also not exactly an enemy either. Almost all countries can be fit along those lines in the middle, since in one area, they may be considered to be “friends”, such as security, while in other areas they are direct competitors, i.e. the economic sphere. Many are baffled by this contradiction and how to resolve it using diplomacy.

The American public needs to be convinced that the world does not really operate on a principle of “good” vs “evil”, but in large measures are based on interests. Nations cooperate with one another not really because they are “friends”, which will stand by each other through storm and calm. But rather, they are working together because they have a shared interest in seeing each other succeed and that they can get the most out of the international system through working together. Lord Palmerston, prime minister of the United Kingdom, said it well when he stated: “We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.” These are the governing principles of international relations that most of the world adheres too, and if America as a nation are to adapt to the conditions of international relations as it exists currently, we must adhere to this concept. Of course, that is not too say that we should be a hyper-Realist and see the world only in terms of interests and forget our roots in democracy and freedom, but that simply, we need to recognize that this is how the rest of the world operates and if we are a member of this global community of nations, it is in our best interest to be moderate in our thoughts and actions and to see the world not as a black and white image of good and evil, but rather as a collection and patchwork of interests and ideas that needs to be looked into.

On Iran’s nuclear program: an alternative view

Posted on by fqzhang

Iranian nuclear program has drawn a significant amount of international attention – and condemnation – since it was uncovered in the early 2000s. While the issue is complex and multifaceted, I believe a few points should be examined. First, why is the Iranian government desirous of a nuclear program? And do the people really want it? Second, how should the rest of the world respond to it? Are the current negotiations with Iran the best way to approach this issue? And lastly, how should we all proceed from here?

The Israeli historian Martin van Creveld once said that “Had the Iranians not tried to build nuclear weapons, they woul6a00d8341c4fbe53ef00e54f31467c8833-640wid be crazy.” Although his words may seem extreme, we need to understand what motivated the Iranian leadership to develop nuclear power, even in the face of mounting international oppositions. The Iranians’ own argument is that they need to secure their own energy needs in the form of nuclear power. This argument is hardly plausible: Iran is sitting on the world’s second largest reserves (after Russia) of natural gas. Iran’s South Pars gas field alone is estimated to contain 14×10^12 m3 of gas, around 5.6% of the entire world’s prove gas reserves. Moreover, the country contains the 4th largest reserves of oil in the world. Iran’s energy needs can largely be satisfied by its oil and natural gas, as can be seen in the chart below. iran energyIf energy security is not the real reason, then what is? The true reasons for such a program, I believe, includes the following:

  1. Scientific and cultural prestige: Let’s imagine that the Iranians do not in fact want to build a nuclear weapon (a highly unlikely assumption for reasons that I will explain later), the mere fact that Iran is capable of developing advanced technology is something that the Iranian government can be proud of. In Iran, like many other parts of the world, scientific advances symbolizes the greater progress made in a society. The Iranian government sought to legitimize itself by promoting science and technology (much like the Soviet Union spent tremendous efforts in space exploration to legitimize the ideology of Communism). The Iranian people want to see progress being made in a variety of different fields, whether it be a rocket launch or a prospective nuclear power generation plant. Iran is gaining prestige by possessing those technologies. In a sense, scientific prestige is also tied into cultural prestige. We need to remember that Iran is more of a historical civilization than a nation-state in the modern sense of the word. The Iranian people had inhabited the Iranian Plateau for thousands of millenniums, and for much of that period Iran (or Persia, as it is known for most of its history), is a leading force among the world’s nations, and not merely in technology. It is in early modern times that Iran had fallen behind. In a way, many Iranians want to regain that sense of pride which have belonged to them historically. As heirs to a rich cultural heritage, Iranians today no doubt want to relive a part of its ancient glories; developing nuclear powers along the lines of other advanced nations will symbolize a part of this regaining of prestige.Mideast-Iran-Nuclear-_Horo2
  2. Competition from regional powers: Let’s take a look at how the world appears from the position of Iran, and why its nuclear ambitions will likely lead to nuclear weapons. Geographically, Iran couldn’t be in a more dangerous position. As the map below shows, Iran is surrounded by potential or probable enemies. To its west, Iraq, despite its Shia majority (the majority religion in Iran), is embroiled in a complicated civil war with the radical Islamic State (IS). Further west, we see a similar situation in Syria, where Iran-backed government of Bashar al-Assad is fighting a multi-front war against IS and moderate rebel forces. Each of these governments, if they fall, would produce a serious threat to Iran itself; and these are just the militant organizations. Organized threats by nation-states posed a bigger problem still. In its southwest, across the Persian Gulf, the Kingdom of Saudi Arabia is ferociously anti-Iranian and possesses a powerful modern military and an alliance with the United States; other Sunni Gulf States are no more friendlier. Further to the west, Iran faces the strongest military power in the region in the state of Israel, which had spear-headed efforts to contain the Iranian enrichment program. Further to its north and east, Russia, China, Pakistan, and India are all nuclear powers. In such a dangerous neighborhood, Iran felt that by developing the bomb, it can achieve a sort of parity with the other regional and global powers, at least in part to compensate for its relatively conventional forces.
  3. Security and Geopolitical leverage: In a point related to the second one, we need to be aware of the fact that Iran really has no natural allies. Culturally, it is the product of thousands of years of Persian civilization centered in the plateau of Iran, influenced by the forces of Shia Islam for centuries (today, an absolute majority of the world’s Shia Muslims lives in Iran), and the rise of political Islam in the form of the Iranian Revolution of 1979. For good or bad, few other countries possess such a unique historical experience. While this is a point of pride for many Iranians, at the same time, this also meant that Iran cannot count on any natural allies in the sense that the UK can rely on the US or Kuwait can rely on Saudi Arabia. The allies and friends it does have among governments are less than appealing: Iraq is bogged down in a struggle of a sectarian nature between Shia-dominated government and Sunni militant Islamists; likewise Syria is fighting its seemingly interminable civil war; the militant group Hezbollah in Lebanon is considered an ally and a way for Iran to project power into the eastern Mediterranean, but is categorized as a terrorist group (its military wings at Shia_Crescentleast) by most governments around the world. Strategically, Russia can be considered an ally, but that nation is struggling in the face of western sanctions for its involvement in the Crimea and a falling oil price. (For a discussion of how falling oil prices are influencing foreign policies in Russia and Iran, see here). Iran is looking for new partners in China and India by offering them energy security; but this venture will be unlikely to result in any serious partnerships, especially if this partnership would result in possible international retaliations by the West. Iran is therefore left to defend itself against a myriad of threats. In this case, a nuclearized Iran can protect itself, or so the Iranian leadership believed, from military blackmailing. At the same time, Iran can project its power in what is known as the “Shia Crescent”, an area encompassing Iran, Iraq, Syria, and Lebanon, shaping itself into a regional power. Iran believes that thus nuclear power adds more muscle to its voice in regional and international affairs.

Needless to say, no matter what the reasons are for Iran’s acquisition of nuclear power, the rest of the world cannot be happy about the emergence of another potential nuclear power. However, the present countries that possess nuclear powers are in fact rebuilding their own respective nuclear arsenals even while they are denouncing the Iranian’s attempts to do so. We see that the rest of the world has been upgrading their own nuclear arsenals as well. In a recent article on Business Insider, the dangers of a nuclear war is emphasized more than ever before. However, the difference is that Iran is widely seen as an irresponsible government, and weapons in the hands of such a state is a worrying fact. But how should the rest of the world respond to it? Along the lines of journalist Fareed Zakaria, I believe that there are two main ways for the world to respond: 1. Forcing a Regime Change, or 2. Forcing a Policy Change. Let’s briefly define what each option meant and discuss their relative merits later:

  1. Regime Change:

In essence this would involve the fomenting of dissent, support democratic political movements, and with outside help in trying to overthrow the government of Iran in one form or another. Most likely, the United States would be the leader in such an effort. In the meanwhile, the US and other parts of the world should not have anything to do with Iran since it is an illegitimate government in their eyes. In the views many, the only way to properly address the nuclear situation with Iran is wait (or help) the government to change and then deal with them later.

  1. Policy Change:

This would mean that we will actively engage with the present government of Iran, treating them as an equal partner in these discussions, and really accept the fact that the government of Iran, however repulsive, is here to stay for some time to come. The dialogues will be conducted in an open manner and be peaceful in trying to reach a deal with Iran. For supporters of this option, they do not believe that this is a policy of appeasement, but rather, a step-by-step method toward achieving our objective, whatever they may be.

As a sophomore in college, I may not be in the best position to recommend foreign policy to those in the highest levels of government. But, nevertheless, I believe that here in the US and the rest of the world that does not desire to see a nuclearized Iran, have to decide on an option fast and not to oscillate back and forth between these two options. How can you possibly struck a deal with a government that you have every intention to help overthrow? Personally, I believe that the best option remains to bring Iran back into the international system, which it had been an outcast member since 1979, and to engage with it in more direct dialogue. We need to bring in international partners, which must include China, India and Russia, to discuss options with the Iranians on what to do. We must make Iran as an equal partner in its negotiations and not treat it as a criminal state. We need to recognize Iranian interests and why they sought to nuclearize themselves and to stress our own positions and concerns in why we do not want to see a nuclear program: no, it is not that we desire to encircle Iran on all sides, and no it is not that we desire to see a weakened Iran that is susceptible to invasions at any given moment. There are too much distrust and misconceptions between Iran and the West at the moment, each is mistrusting the other’s intentions. Therefore, if we can build an international coalition on resolving the issue, we can legitimize our intentions and make the Iranians understand that it is in the interest of the rest of world for them to denuclearize.

Current policies in delaying Iran’s nuclear programs have many merits to them. Firstly, the alternative, that of calling Iran to immediately destroy their nuclear facilities, will only strengthen their resolves in continuing to build them. If not in open, then in secret. Therefore, delaying what Iran has been attempting to do, by years (a very possible prospect), leaves the rest of the world with more options in dealing with the government. But more importantly, it buys the rest of the world time. The structure of government itself may likely change with the passage of years. I do not necessarily mean a revolution, but rather a gradual process of liberalization that will see a new generation of Iranian leaders that do not want to confront the world and or is filled with xenophobia, but rather sought peaceful coexistence. Younger generations of Iranian do not have the fervors of religious fanaticism that may have characterized some of their parents; in fact, I believe that many young Iranians today want to embrace the international system and be a part of modern society. I believe that will the passage of time, Iran can be a more responsible stakeholder in the international system and we can work with Iran toward this issue. However, in order to do this, we must first talk openly with Iran.

The importance of continuing dialogue with Iran cannot be overstated. If left isolated, Iran will retreat into itself and develop and deepen a paranoia of the rest of the world and perhaps the unthinkable will happen: a nuclearized Iran ready to use its weapons on its neighbors and beyond. As a historical analogy, imagine what if Henry Kissinger had never traveled to China to open up dialogue with that secluded nation, China today would possibly have been another North Korea: a government that is isolated and clung to an outdated ideology with a belligerent attitude toward the rest of the world. But to the credit of the US government (both the executive and the State department), rather than seeing this happen, the US government actively engaged with Chinese leadership and brought China into the international community of nations; a community that China has a stake in. In a similar line, I believe that by keeping the dialogue option open with Iran, we can hope to make some progress. Of course, this can only happen with Iranian commitment as well, and it needs to tone down the rhetoric against its neighbors and their allies, most notably Israel and the United States; it needs to show real commitment in following through with its promises; but above all, Iran needs to see that it is to its own security and benefit that it becomes a part of the international system rather than a challenger to it. Perhaps, eventually, Iran will be able to develop its own peaceful nuclear program, much as how Japan and South Korea has developed them, without feeling the need to weaponize it. All of these will likely take an enormous amount of time, likely decades; but I believe that in the end, the path of continued negotiations and dialogues with Iran will be preferable to any other alternative.

For related topics see:

Resource dependency, oil price decline, and the reshaping of the international order

Oil companies and the ethics of overseas investment

Resource dependency, oil price decline, and the reshaping of the international order

Posted on by fqzhang

In today’s economy the need for a diversification of the economy is more important than ever. In particular, at the time this post is written (February 13th, 2015), oil prices are its lowest prices in years as a result of the proliferation in supplies and sluggish global demands. All nations, whether they are a net importer or a net exporter, are feeling this squeeze on their national income.

The impact of this fall in oil prices are wide and cuts deep on those countries that depend on this resource. Witness the current crisis that Russia is facing: an economy that that facing sanctions on its key pillars: defense, which is a legacy of the Cold War era competition; energy and mining, both of which are resource based and depends on the global commodities market, and financials, which are in large part the results of capital inflows as a result of the sales of natural resources). And now, with the decline in the price of oil, Russia is finding less and less takers for its petroleum and natural gas reserves, while at the same time, Europe is moving away from the Russian gasman by investing more in green energy and meeting their energy needs through other needs, such as natural gas imports from America. As a result of this, investors have been pulling money out of Russia, resulting in a steep fall in the value of the ruble, a fall of around 50% at its lowest point. While the fall of the Ruble had stabilized recently, the impacts have been far reaching and severe, and it may take years for Russia to come back from this deep crisis. (on oil and national corruptions, click here.)

And Russia is not alone in facing such a challenge to its state coffers as the country tries to balance its budget moving forward to 2015. Iran, whose economy is even more dependent on the selling of natural resources, has been even harder hit. The stagnating national economy can only be expected to be getting worse in the coming years. Likewise, Venezuela, a nation that stylized itself as an example of 21st century socialism, is in fact heavily dependent on oil to fund many of the social programs that the country is currently undertaking. A fall in its chief exports is likely to cause price rises on a variety of goods, such as food and fuel, which are heavily subsidized using state oil revenues. Moreover, it will likely increase the populace’s discontent with the national government, challenging the government’s very own legitimacy.

The overdependence on natural resource is what is often termed a “resource curse” or the “Dutch disease”, based on the supposingly devastating effects of the discovery of natural gas off the coast of the Netherlands on the Dutch domestic industry during the 1970s. In short, the theory suggests that with an increase in oil revenue, which are in essence easy money that does not take much investment, the government and society as a whole will move away from other sectors of the economy such as manufacturing and research and development. There is simply too little incentive to focus on growing the economy long-term when in the short-term, easy cash flows are being generated. The long term determinants of growth, which includes the accumulation of capital and the improvements in technology (according to the Solow model), are ignored in favor of the easy money that the country can easily receive from selling its natural resources. The government may then distribute this oil wealth to the populace to increase its popularity, or to pursue its own political agendas abroad (Iran in the case of interventions in Iraq and Syria, Russia in the case of its Near Abroad of Georgia and Ukraine). Such a huge amount of easy money in good times will give the government tremendous power in international affairs, leading to the state being called an “energy superpower”.

Another important point to note, as no doubt many have already observed, is that resource dependency tends to breed authoritarian forms of governance. In any case, a government that receives 60% or more of its revenue from selling its natural resources tends to be less free than those that are more resource-scarce. There are a couple of reasons for this:

First, remember the slogan of the American Revolution, “No Taxation without Representation”? Have you ever considered how true this is literally? In other words, if a government do not tax its citizens, or at least not tax them as much, does the government still have responsibility to provide its citizens with a representative form of government? In the cases of the oil-rich countries, when the government’s revenue does not depend on the cooperation of its citizens, there is little incentive for them to give rights to their citizens for a form of participatory democracy. Any sort of social benefit provided to the country’s citizens can be thought of as a “gift” to the populace, since it is not with their tax dollars that these programs are funded. The government may not feel like they owe their citizens anything, and thereby giving the government more leeway in pursuing their own goals.

Secondly, as this is a national resource, the ones who will be managing it most closely will likely be government bureaucrats, acting on behalf of the entire population. Obviously, such an arrangement will lead to corruption, cronyism, oligarchies, etc, since so much money and power are concentrated in the hands of so few people. This is simply too tempting for government officials not to abuse their power to enrich themselves in one way or another. Often, governments will sought to protect their own interests by clamping down on those who threatened their monopoly on the national wealth, leading to increasing authoritarianism and undemocratic forms of governance. For further discussion on oil and global corruption see here.

How is all of these going to affect the international arena as we move forward in 2015? It is interesting to note that the three countries we have mentioned thus far – Russia, Iran, and Venezuela – are in one sense or another a geopolitical rival of the United States. As we have previously noted, increased amounts of oil revenue will leads to more undemocratic forms of government, which in turn leads to more irresponsible governments, which are more likely to engage in forms of military adventurism and assertive foreign policies. I would argue that Russian would not have invaded Georgia in the summer of 2008, when the world’s attention has been focused on the Beijing Olympics, if it had not been for the fact that oil prices had been at its historic heights and much of Europe depends on the oil and natural gas provided by Russia. The anti-western rhetoric of Hugo Chavez would not have gained traction had it not been for the fact that Venezuelan oil had given him the economic foundation and confidence to do so.

But with the dramatic decline in oil prices since the middle of last year, all of these geopolitical conditions are bound to change. The large net oil exporters, not only Iran, Russia, and Venezuela, but also US allies such as Saudi Arabia, are going to see a drastic decline in their influence, which will require them to adjust their respective foreign policies accordingly. Let’s go through the three main powers we talked about here one at a time:

  1. Russia: The current involvement of Russia in the Ukraine started when the oil prices were still relatively high, and when American natural gas exports to Europe are only starting. But now, a year later, Russia simply no longer have the sort of leverage to keep the European Union from fighting back against Russia designs, whatever it may be. My prediction for the current conflict would likely be for Russia and the separatists to drag things out a little longer to maximize their gains and to destabilize the situation in the Ukraine further and then to come up with a peace treaty with greater autonomy for the east of Ukraine in mind. In the end, Russia’s geostrategic goal is not necessity annex the region as it did with Crimea, but rather to influence it in such a degree that Ukraine’s foreign policies would still have to take Russia into consideration.
  2. Iran: Without a sufficient source of oil revenue, the Iranian backing of Assad’s regime in Syria and the ongoing fight against the Islamic State will be in jeopardy. This compounded with the continuous international actions against Iran will seriously hurt the Iranian nation. Therefore, it is likely that we will see an Iran that is more willing to compromise on many key issues, from Syria to its nuclear program, diminishing somewhat its power in the Middle East.
  3. Venezuela: The populist government of President is already under tremendous economic and political strain from before the fall in the prices of oil. And now, if oil decline continues, we may see increasing pressures for political reforms in Venezuela.

And to talk about it briefly, we may also expect to see the relative increase in power among the net oil importers, which includes large sections of East and Southeast Asia, and non-oil producing South America. Although, this increase in power for the net importers may be less than the decrease in power of the oil exporters, in part because there simply more oil importers than exporters.

Significantly, countries that are energy poor but are growing through economic means, such as Turkey and China, may become stronger than before. Their freedom to maneuver will likely increase, and they may become more assertive in their respective neighborhood. The impacts of their rise will remain yet to be seen. In political relations, we speak of both “hard” and “soft” powers, with “hard power” defined in military means, while soft power is described as cultural influences. Country’s national power is no longer measured by what they can produce or how they can impose their wills on the world. Some countries, particularly in Europe and East Asia, may see themselves benefitting from the oil decline as beneficiaries of tourism and places of interest for the entertainment industry. Whatever the shift in geopolitics may be, we may be guaranteed that we will see a shift in the international order in the coming years (assuming oil prices remained low), where countries that have obtained enormous power through using energy as a chess piece will see a decline in their influence and more power will be shifted toward nations with strong economic performances and a more solid source for their power, whether they be strong economic performers like China or Turkey, or strong “cultural powers” like Korea or the UK.