Friedman on Petropolitics and Global Corruption

Robert Siegel talks with Tom Friedman, "Foreign Affairs" columnist for The New York Times and the author of the newly-revised bestseller, The World is Flat. Friedman will discuss his piece in this month's issue of Foreign Policy, "The First Law of Petropolitics." In the article, Friedman posits that democratic institutions generally suffer when the price of oil rises, leading to petrol-producing countries that are simultaneously rich and corrupt.

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ROBERT SIEGEL, host:

A developing country that sits on big oil reserves can count on people in this part of the world to pay attention. Our country has an immense interest in Kuwait, Iran, Iraq, Nigeria, Saudi Arabia. They are all oil rich.

In this time of rising oil prices, a number of oil rich states appear to be getting less, rather than more, democratic. And Thomas Friedman, a New York Times columnist, has concluded that there is more than coincidence at work. Tom Friedman has written an article for Foreign Policy magazine called The First Law of Petropolitics. Welcome to the program.

Mr. TOM FRIEDMAN (Columnist): Great to be here.

SIEGEL: A law, not even a hypothesis.

Mr. FRIEDMAN: No, if you're going to, if you're going to put something out, it's got to be an iron law. This is Newtonian physics we're talking about.

SIEGEL: Okay, enunciate the first law of petropolitics.

Mr. FRIEDMAN: The first law of petropolitics basically states that there's an inverse correlation between the prices of oil and the pace of freedom. And basically, what it argues is that as the price of oil goes up, the pace of freedom goes down in what I would call petrolist states. And I define petrolist states, Robert, as states that either are very weak institutions or are already authoritarian states and are highly dependent on oil for their GDP.

Now, the converse is also true. As the price of oil goes down, the pace of freedom goes up in petrolist states.

SIEGEL: Now, we'll go into what's at work here in a moment, but first, oil prices are easily quantifiable. They're numbers. Freedoms, democracy, a little squishier.

Mr. FRIEDMAN: Definitely, and I state that in the piece, that obviously, we're dealing with something that is hard to quantify. So, what we did in the piece was basically produce some graphs, which we invented ourselves. We took the price of oil on one axis and then we took the Freedom House Freedom Index and we overlaid it on the price of oil. And they actually graphed the rise and fall of freedoms as they defined them, everything from the formation of political parties to free and fair elections to independent newspapers and judiciary.

And what you do see in these petrolist states is a very interesting rough correlation that as the price of oil goes up, the pace of freedom goes down. And as the price of oil goes down, the pace of freedom goes up.

SIEGEL: Okay, let's take an application or an example of this law at work. The price of oil goes up, what happens in a given country?

Mr. FRIEDMAN: Well, basically what happens, and some political scientists have charted this at the micro level very well. Professor Ross at UCLA has done a wonderful job of this. He basically shows how, as these regimes acquire all this wealth, what do they with it? They use it to buy off opponents. They use it to make themselves resistant to international pressure. They use it to build up their intelligence services, security services. They use it, basically, to squash any kind of opposition voices and make themselves much more insulated to any pressures to reform.

SIEGEL: On the other hand, the development of an internationally minded commercial class is almost unnecessary when more and more billions will come in every month.

Mr. FRIEDMAN: Exactly. If you can just tap an oil well instead of tapping your people, you're on easy street.

You know, Robert, the theme of the American Revolution, the motto of the American Revolution was what? No taxation without representation. The motto of the petrolist states is, no representation without taxation. If I don't have to tax you, I don't have to represent you, pal.

SIEGEL: Now, well, we're not talking here about Norway, Britain, or the United States of America.

Mr. FRIEDMAN: No, because they are not states with weak institutions or authoritarian.

SIEGEL: Now, it's true that, say, Nigeria in this time of rising oil prices has an incumbent president who's apparently trying to bribe his way into remaining in power. But in the rest of West Africa, it's not exactly a new Periclean Age, either, of burgeoning democracy. One could say what ails Nigeria also ails most of the rest of the region.

Mr. FRIEDMAN: To some extent, and obviously I'm pushing this very hard when you try to isolate, say, oil as opposed to all these other historical factors, cultural factors, and economic ones. But you know, it is kind of interesting that one of the longest and most thriving democracies in Africa is Botswana, and Botswana has no oil. Could it be an accident, Robert, that the only Arab state that has been a democracy from its very birth is the one Arab state, or one of the very few, that never had a drop of oil, called Lebanon?

SIEGEL: You also cite the example of Bahrain as part of your case.

Mr. FRIEDMAN: Yeah, precisely, because Bahrain is the first Arab gulf state to be running out of oil. It also happens to be the first Arab gulf state to hold a free and fair election where women could run and vote. And it also happens to be the first Arab gulf state to sign a free trade agreement with the United States. And it also happens to be the first Arab gulf state to be reforming its labor laws so its people can no longer be dependent on foreign workers. I don't think that's an accident.

SIEGEL: In one to one corollary to the Friedman's first law, here, of petropolitics is that if oil revenues are declining because of a lower price of oil, government in the country, you've got to start thinking, you've got to start using other resources that your people present in order to get by in the world.

Mr. FRIEDMAN: Yeah, you've got to actually create a society that will maximize your ability to extract the talent, energies, and entrepreneurship of your people, men, and women and that requires a different kind of politics.

SIEGEL: In a way, you're saying freedoms and democracy are associated with the development of countries beyond a natural resource-based economy. Beyond the mere extraction of natural resources.

Mr. FRIEDMAN: Because I think you have to develop a certain DNA. One of my favorite countries in the world has always been Taiwan. I mean, Taiwan is a barren rock in a typhoon-laden sea. They have zero natural resources. Yet they have what, the fourth or fifth largest financial reserves in the world, all by creating a society that maximized their ability to extract the talent of their people and unleash that. And you just don't do that when you can drill an oil well.

SIEGEL: Well, beyond the first law of petropolitics and its contra-positive, do you have any other laws that you're going to evolve in this petropolitics?

Mr. FRIEDMAN: No. I'm tapped out.

SIEGEL: Well, Tom, thanks for talking with us.

Mr. FRIEDMAN: My pleasure.

SIEGEL: Thomas Friedman of The New York Times and author of the book The World is Flat, and also of the article in Foreign Policy Magazine called The First Law of Petropolitics.

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