Download Can Canada become a Responsible Oil Power? What it means to

Can Canada become a Responsible Oil Power? What it means to be a petro-state and the
issue of democracy.
I’m interested in discussing this relationship between mineral resources, economic performance,
the State’s capacities and democracy or democratisation. What is the difference in the structure
of the petro-state if it were an advanced democracy or of a more authoritarian nature? In order to
answer that question, I intend to provide a brief comparative and historical study of countries that
have succumbed to the resource curse, namely Venezuela, Nigeria and Saudi Arabia. In general,
I want to look at the petro-states and see how many or few of them have been advanced
democracies. In that part, I will inevitably discuss the case of Norway. With this study, I hope to
analyze the Canadian context, in particular by examining the decisions that are carrying Canada
into becoming a petro-state.
Explaining the resource curse thesis:
Oil is a resource that is considered to be both a blessing and a curse. A blessing because it brings
its country great wealth and a curse because it hinders democracy. Countries depend on fossil
fuels for 80% of its national energy1. The resource curse thesis, otherwise known as Dutch
Disease, attempts to explain “how countries with abundant energy resources not only do not
benefit from them but also post economic growth lower than that of countries with fewer natural
resources […] it is governments that ultimately makes decisions, or at least have a high potential
on oil policy and where revenue ends up2.”
Comparative/historical study of three non-democratic petro-states, Venezuela, Nigeria and
Saudi Arabia: political regimes and democratization. How oil-wealth influences the
political structure of the state.
In most of these poor yet oil-rich countries, the petro-state’s survival depends almost entirely on
the steady export of oil. This in turn means that there is less concern for democracy and
representation. In order to maintain the wealth of the state, the petro-state must continue to rely
on oil revenues. Oil becomes a curse in so far as the resource is used to pursue and foster the
interests of an oligarchic elite who are responsible for managing the country. Most of these
petro-states are marked by weak institutions, unreliable leaders and violent behavior (suppressing
Bruce Campbell. “Norway manages its oil wealth much better than Canada does”, Canadian Centre for Policy Alternatives, 1
November 2012
2 Manuel Hidalgo. “A Petro-State: Oil, Politics and Democracy in Venezuela (WP)”, Real Instituto Elcano, June 11, 2007.
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citizens and unsettling their regional neighbors)3. Political Structure of the petro-states: most of
the countries considered to be petro-states are weak governments, characterized by corrupt
elites…
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
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Venezuela: irrespective of steady oil revenues, Venezuela has not capitalized on oil
wealth for the procurement of public goods.
Nigeria
Saudi Arabia: Saudi Arabia can be classified as a “rentier state” because a large part of
its revenue comes from external rents, for instance the sale of oil.
Comparative/historical study of advanced democracies, Norway and Canada

Norway: the exceptionally successful petro-state
The basic assumption is that advanced democracies have the right institutions and are
transparent and thus able to avoid succumbing to the resource curse. In fact, currently
only one petro-state has managed to escape the resource curse and that is Norway.

Canada: a ‘rogue’ petro-state in the making?
The Canadian dollar is driven higher because of higher fossil fuel exports. By putting its
eggs into one basket and neglecting other pressing issues such as climate change, Canada
is heading towards being called a petro-state. With the Canadian economy being headed
by fossil fuel exports, the Canadian government is not leaving any room for discussion
regarding the oil sands industry and the pipeline projects. Anyone who criticizes the
industry is seen to be unpatriotic and against Canada’s prosperity. This is turn means that
Canada is heading towards a dangerous path, fueled by a narrow-sighted government
who in turn is oil-hungry and less democratic and less representative than it claims.
Resources are finite. By putting its eggs into one basket and neglecting to look towards
other means for prosperity, the Canadian economy is a ticking time bomb. What will
happen if there is no more resource? With so much focus going into the oil sands
industry, Canada’s environmental policies are falling wayside. The government is clearly
less interested in developing its climate change policies and this lack of transparency is
jeopardizing investment in Canada’s energy sector, not to mention, discrediting the
federal government when it comes to investing in issues of national concern to
Canadians. All of this investment in higher fossil fuel exports as well as oil extraction is
3
Satya Das. 2010. “The only advanced democracy of the world’s oil powers”, Diplomat and International Canada, p.32-33
leaving Canada with depleted energy supplies, devastated landscapes and polluted waters.
The biggest concern perhaps is that Canada, as a seemingly prosperous economy, is
unable to compete with those of states that are on their way to further investment in the
industry of renewable energy.
What is a petro-state: According to Bruce Campbell, executive director of the Canadian Center
for Policy Alternatives (CCPA), a petro-state is a country that is “dependent on petroleum for 50
percent or more of export revenues, 25 percent or more of GDP, and 25 percent or more of
government revenues.”
In Canada, jurisdiction over resources is allocated to the provinces, yet the monetary policy
remains at the federal level.
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Centralization of power: the Canadian government is deeply invested in the
development of the oil sands industry and has invested a lot of financial resources
into it. This is turn means that other industries, such as, are being disregarded.
Democratic rule and representation: the oil sands have become a topic of high
concern for the government, namely one that it boasts. Anyone from the opposition or
the public who criticizes the oil sands industry and pipeline projects is deemed to be
unpatriotic and is dismissed rather awkwardly.
No national energy plan for Canada
What can be done to better manage this, or stop it from happening?
Creating a savings fund resource wealth management like Norway: revenues from oil
sands industry can be used for government funding. That government funding however
does result in Canadians paying higher taxes, but unlike Norway, instead of representing
the citizens (the tax-payers), the Canadian government prefers to serve the interests of
oil-producing companies at the expense of public development and democracy.
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