What resource wars?

• Author: Victor, David G.
• Position: From Arabia to Zion - Essay

RISING ENERGY prices and mounting concerns about environmental depletion have animated fears that the world may be headed for a spate of "resource wars"--hot conflicts triggered by a struggle to grab valuable resources. Such fears come in many stripes, but the threat industry has sounded the alarm bells especially loudly in three areas. First is the rise of China, which is poorly endowed with many of the resources it needs--such as oil, gas, timber and most minerals--and has already "gone out" to the world with the goal of securing what it wants. Violent conflicts may follow as the country shunts others aside. A second potential path down the road to resource wars starts with all the money now flowing into poorly governed but resource-rich countries. Money can fund civil wars and other hostilities, even leaking into the hands of terrorists. And third is global climate change, which could multiply stresses on natural resources and trigger water wars, catalyze the spread of disease or bring about mass migrations.

Most of this is bunk, and nearly all of it has focused on the wrong lessons for policy. Classic resource wars are good material for Hollywood screenwriters. They rarely occur in the real world. To be sure, resource money can magnify and prolong some conflicts, but the root causes of those hostilities usually lie elsewhere. Fixing them requires focusing on the underlying institutions that govern how resources are used and largely determine whether stress explodes into violence. When conflicts do arise, the weak link isn't a dearth in resources but a dearth in governance.

Feeding the Dragon

RESOURCE WARS are largely back in vogue within the U.S. threat industry because of China's spectacular rise. Brazil, India, Malaysia and many others that used to sit on the periphery of the world economy are also arcing upward. This growth is fueling a surge in world demand for raw materials. Inevitably, these countries have looked overseas for what they need, which has animated fears of a coming clash with China and other growing powers over access to natural resources.

Within the next three years, China will be the world's largest consumer of energy. Yet, it's not just oil wells that are working harder to fuel China, so too are chainsaws. Chinese net imports of timber nearly doubled from 2000 to 2005. The country also uses about one-third of the world's steel (around 360 million tons), or three times its 2000 consumption. Even in coal resources, in which China is famously well-endowed, China became a net importer in 2007. Across the board, the combination of low efficiency, rapid growth and an emphasis on heavy industry--typical in the early stages of industrial growth--have combined to make the country a voracious consumer and polluter of natural resources. America, England and nearly every other industrialized country went through a similar pattern, though with a human population that was much smaller than today's resource-hungry developing world.

Among the needed resources, oil has been most visible. Indeed, Chinese state-owned oil companies are dotting Africa, Central Asia and the Persian Gulf with projects aimed to export oil back home. The overseas arm of India's state oil company has followed a similar strategy--unable to compete head-to-head with the major Western companies, it focuses instead on areas where human-rights abuses and bad governance keep the major oil companies at bay and where India's foreign policy can open doors. To a lesser extent, Malaysia engages in the same behavior. The American threat industry rarely sounds the alarm over Indian and Malaysian efforts, though, in part because those firms have less capital to splash around and mainly because their stories just don't compare with fear of the rising dragon.

These efforts to lock up resources by going out fit well with the standard narrative for resource wars--a zero-sum struggle for vital supplies. But will a struggle over resources actually lead to war and conflict?

To be sure, the struggle over resources has yielded a wide array of commercial conflicts as companies duel for contracts and ownership. State-owned China National Offshore Oil Corporation's (CNOOC) failed bid to acquire U.S.-based Unocal--and with it Unocal's valuable oil and gas supplies in Asia--is a recent example. But that is hardly unique to resources--similar conflicts with tinges of national security arise in the control over ports, aircraft engines, databases laden with private information and a growing array of advanced technologies for which civilian and military functions are hard to distinguish. These disputes win and lose some friendships and contracts, but they do not unleash violence.

Most importantly, China's going-out strategy is unlikely to spur resource wars because it simply does not work, a lesson the Chinese are learning. Oil is a fungible commodity, and when it is sourced far from China it is better to sell (and buy) the oil on the world market. The best estimates suggest that only about one-tenth of the oil produced overseas by Chinese investments (so-called "equity oil") actually makes it back to the country. So, thus far, the largest beneficiaries of China's strategy are the rest of the world's oil consumers--first and foremost the United States--who gain because China subsidizes production.

Until recently, the strategy of going out for oil looked like a good bet for China's interests. But, despite threat-industry fear-mongering, we need not worry that it will...