1. NS4054 “Oil and Politics in Southeast Asia” Benjamin Smith

2. Author Benjamin Smith PhD University of Washington 2002 Associate Professor at the University of Florida, teaching comparative and Asian politics, ethnicity and nationalism, post-conflict peace-building Research focus: Separatist conflicts, regime change, democratization, and the politics of resource wealth Books and several publications 2

3. Agenda Overview “Old” Oil Exporters Research Design and Findings What to Expect to the New Exporters? Conclusion 3

4. Overview Research question How is the impact of oil income on politics in Southeast Asia? Key arguments The effects of resource wealth are frequently conditional and therefore dependent on antecedent conditions Looks at three oil-shaped dynamics The trajectories of older exporters (Brunei, Malaysia, Indonesia) Broad regional trends since 1990 The emergence of three new exporters (Cambodia, Timor-Leste, and Vietnam) since 2000 Mono-causal approach vs Conditional approach 4

5. “Old” Oil Exporters Brunei Indonesia Malaysia 5

6. “Old” Oil Exporters Brunei Independent in 1960s Resembles the small Gulf monarchies Crude oil and natural gas share 60% of GDP and more than 90% exports Oil has small impact to the politics: “Shellfare” by the regime Civil-service majority Small impact politically and economically during Asian financial crisis 6

7. “Old” Oil Exporters Indonesia 1960s-1970s : boom years in Indonesia’s oil industry Mid-1980s oil price crash: difficult period for the Indonesian government -> more autonomous economy Production decline -> left OPEC in 2008 Results: Oil-led to export-led manufacturing Authoritarianism to democracy 7

8. “Old” Oil Exporters Malaysia Oil dependent 1969 race riots -> assertive government response to the violent expression 1970s oil boom: a chance to restructure the economy Oil revenue was used to boost export competitiveness 8

9. Research Design Purpose: to explore the general effects of oil export dependence in Southeast Asia Research approach: Quantitative analysis (regression analysis) Data used: 12 countries in Southeast Asia Period: 1990 – 2008 (except Timor-Leste, from 1999) Using oil income per capita instead of GDP to measure oil export dependence Independent variables: Oil income per capita, GDP per capita, annual GDP per capita growth Outcome variables: Democracy, Conflict, Governance 9

10. Hypotheses/ Common Trends Democracy More oil income = less democracy Conflict Oil-rich countries are more prone to internal conflicts Governance Oil exporting countries will score lower on the two governance indicators (Government effectiveness and Control of Corruption) 10

11. Result 11 Main oil exporters

12. Result 12

13. Hyphoteses vs Result HypothesesResult DEMOCRACY More oil income = less democracy CONFLICT Oil-rich countries are more prone to internal conflicts Oil or per capita wealth does not have significant relations to the onset of violent internal conflicts GOVERNANCE Oil exporting countries = bad governance Oil exporters have more capable government 13

14. What to Expect to the New Exporters? Cambodia, Timor-Leste, and Vietnam Influence of oil revenue to the political economies? Likely for Cambodia and Timor-Leste Unlikely for Vietnam 14

15. What to Expect to the New Exporters? Cambodia Oil exploration began in 1969 but stopped when the Khmer Rouge came to power Offshore discoveries in 2005 3-5 trillion cubic meters of natural gas 400 million barrels of oil Problems Democracy: Cambodian People’s Party has undermined political freedom Conflict: Oil income are likely to make renewed conflict more likely Governance: The government is one of the least capable in Southeast Asia 15

16. What to Expect to the New Exporters? Timor-Leste High expectation following 1999 independence No progress in 10 years -> disputes with Australia 90% of population works in agricultural sector -> unlikely change, due to insufficient technological resources to refine oil Problems: Oil revenue distorts country’s currency The misuse of oil revenue by politicians Oil might amplify the problems of poor governance and unresolved sociopolitical cleavages 16

17. What to Expect to the New Exporters? Vietnam Oil exploration began in the 1960s, production took place since 1986 2004 production reached 400,000 barrels per day from just 275,000 in 1999 Modest oil effect to a stable authoritarian regime 17

18. Conclusion No uniform effects of oil politics in Southeast Asia Need to have coherent looks at the various trajectories to understand the political economy of oil Lesson learned Old oil exporters: oil wealth in Southeast Asia has been put to nearly as many political uses as we have yet theorized New oil exporters: oil sector influence can be potentially transformative or modest 18