DOES OIL INCREASE THE RISKS OF COUPS: Evidence from a global data set

An increase in a nations’ oil wealth raises the likelihood of coup attempts against its political leaders, but only if the oil is located on the mainland. This is according to new research by Frode Martin Nordvik, published in the April 2019 edition of The Economic Journal, which finds that knowing the location of oil fields is key to uncovering a link between oil wealth and coups d’état.

The study of global patterns in coup attempts from 1950-2012, covering 190 countries, shows that onshore oil-rich countries spend more, on average, on their military than countries which are mainly offshore oil-rich.  They spend 4% of GDP in only-onshore countries compared to 2.3% of GDP in only-offshore countries.

Why is this important? The author shows that increases in military spending as a percentage of GDP increases the likelihood of coup attempts. According to the research, going from having an average military spend of 3.3% of GDP to the level seen in, for example, onshore oil-rich Iraq, results in coups happening 6 times more often than the global average.  The author tests the hypothesis that, since onshore oil fields are easier targets for rebels than offshore oil fields at sea, onshore oil fields provide greater incentives for governments to spend more on the military. This is to protect their oil fields from rebel attacks, as are commonly seen in Iraq and Syria.

However, a large military is a double-edged sword as it may also turn against political leaders and stage a coup d’état, with roughly 3 out of 4 coup attempts originating in the military. One recent example is the 2016 coup attempt in Turkey, staged by a faction in the Turkish army.

Other studies on oil-rich countries and coups have disregarded the location of oil and looked for a link between oil reserves or production and coup attempts.  As a result, this has failed to find any effect of oil wealth on coups. 

The author uses changes in global oil prices as a proxy for changes in individual counties’ oil revenues.  He weights the variation in oil prices by the long-term average of the country’s onshore and offshore oil production to test for differences in the likelihood of coups, depending on oil’s location. 

The research found that for a doubling of the price of oil, having an onshore oil production on the same level as Iraq, for example, increases the rate of coup attempts by 70%.  Therefore, the impact of onshore oil in Iraq is that a coup attempt happens every 17 years instead of once every 30 years, which is the global average.

The author concludes that offshore oil appears to reduce the chance of a coup.  Having the offshore level of oil production of Azerbaijan decreases the frequency of coup attempts by 52%.  This corresponds to a coup every 60 years instead of the average of 30 years.  Azerbaijan had two coup attempts over the course of 63 years.

Does Oil Promote or Prevent Coups? The Answer is Yes’ by Frode Martin Nordvik is published in the April issue of The Economic Journal.

Frode Martin Nordvik

Associate Professor at Kristiania University College