Webinar Summary – Partial Hegemony: Oil Politics and International Order
By Yaechan Lee
On Thursday, March 17, 2022, the Boston University Global Development Policy Center hosted Professor Jeff Colgan, Associate Professor of Political Science at Brown University and Director of the Climate Solutions Lab at the Watson Institute of Public and International Affairs, to discuss his new book, ‘Partial Hegemony: Oil Politics and International Order’, as part of the 2022 Global Economic Governance Book Talk Series.
In his book, Colgan touches upon a core debate in the international relations literature on what constitutes international order and why or how that definition is informed by the distinct change of order in oil politics since the Oil Shock in 1973. Colgan finds the change was not driven by factors commonly considered to be major catalysts for change, such as existing dominant hegemons or a major global war. Rather, it was driven by a group of non-major powers, or the Organization of the Petroleum Exporting Countries (OPEC), and this fundamentally changed the initial dominance that Western powers and their private companies (the so-called Seven Sisters) had over the oil industry. In this respect, the conventional perception of how politics works, that the hegemon sets up and sustains international order, particularly following war, doesn’t hold. In response to this apparent observational discrepancy between theory and reality, Colgan argues the international order should be perceived as a collection of multiple subsystems, where no single power dominates the entire system. Hence, change within subsystems may occur, hinging on the conditions and power relations unique to each subsystem.
Before discussing the details of the book, Colgan first underscored the book’s relevance to current affairs. To show the importance of the book’s focus on oil politics, Colgan addressed Russia’s war in Ukraine and how the presence of oil can explain why some states may be more inclined to wage war on others, based on his first book, ‘Petro-Aggression’. According to Colgan, petrostates are roughly 50 percent more likely to get into conflict than other nations, as the presence of oil provides oil money to buy off opposing factions or hire security services to suppress citizen opposition while funding military expansion, thereby facilitating the preparation needed for war. When such conditions are coupled with leadership that prefers aggressive foreign policies, the chances of the state becoming an ‘aggressive petrostate’ become higher. In light of the ongoing war, Colgan argued that this has been the case for Russia under the leadership of Vladimir Putin.
Beyond the political implications of oil, Colgan also noted oil production is still placed at the center of the energy industry, making it an all the more important topic. As energy is the bedrock of the modern economy, disruptions in oil supply chains could cause serious setbacks to general industry. Colgan argued it is imperative that the drivers of change are fully understood to dictate order in the oil industry for a more robust risk calculation and the establishment of a more desirable blueprint for the future development path of order within the oil sector. And through a detailed analysis in one sector, Colgan argued meaningful implications can be derived on how subsystems of the international order function and interact with each other. An accumulation of such research efforts would then serve as additional evidence of Colgan’s argument on international order and its subsystems.
Colgan then moved on to present empirical details to back the thesis of the book by first focusing on the oil price volatility before and after the Oil Shock. After World War II, the Seven Sisters controlled 85 percent of global oil production, and were so effective in controlling the oil price volatility that for nearly two decades after the war, there was no significant fluctuation in oil prices until OPEC countries turned the tables. Since then, oil prices have been highly volatile. Colgan argued that the international community must pay attention to how the Seven Sisters were able to exert such an effective influence in the market, why OPEC countries were able to overturn the situation and what implications this sequence of events has on the features of the oil industry as a subsystem. In other words, when is order effective and durable, and when does it change?
Colgan focused on two subsystems within the oil sector to answer these questions. The first was the oil production subsystem which determines how much oil is to be produced and where. As oil fields are distributed around the world, who has sovereignty over which oil fields may be a strong determinant of oil prices. Another more understudied subsystem, he argued, is the oil security subsystem which decides how oil field production may be distributed. The Seven Sisters, backed by the military support of the US and British governments, would provide protection for oil fields, occupy production rights for them and retaliate against those that acted out of the system. Hence, production and price volatility were kept extremely steady. Colgan argued such a level of control was possible due to the imperial legacy of Western economies in Africa and the Middle East, which significantly waned due to the wave of decolonization in the mid 20th century, culminating in the Oil Shock of 1973. In other words, decolonization brought about change in the oil security subsystem, causing the US to lose its hegemony in the oil sector. Although the legacies of such a past remain in the present day in looser form of oil-for-security deals, for instance, between Saudi Arabia and the US, Colgan maintained the link is much weaker than before.
Colgan argued these findings carry important theoretical implications to the study of international order. According to Colgan, in contrast to the ongoing debate on whether the US’s hegemony is waning, international order is governed by a ‘partial hegemony.’ The most influential state maintains dominance in the most fundamental subsystems of the order, such as currency or the military, but the hegemony is partial, as seen in the oil subsystems. Treating order as a monolith leaves scholars blind to this distinction, while seeing in subsystems allows for a more accurate analysis.
The Q&A portion of the webinar involved insightful discussions with the participants, especially regarding how the US can react to the oil supply chain disruptions in Europe due to the sanctions placed on Russia from its invasion of Ukraine, given that the US’s hegemony in the oil sector is not absolute under the subsystem perspective. Colgan noted the clear challenges that the European Union would face in overcoming energy shortages, as it has been overly reliant on Russian natural gas, while also noting the challenges the US and international institutions are facing in increasing production to account for the shortages. Questions on the carbon reduction trend and its effect on the oil sector were also asked. Colgan, however, saw that the oil industry will remain robust at least for the next ten to 20 years, but given the foreseeable reducing demand for oil, the most cost-efficient producers of oil will remain, bringing about a wave of change to the oil sector subsystems.
*
Never miss an update: Subscribe to the Global Economic Governance Initiative newsletter.