Petro-friends: Foreign ownership of oil and leadership survival

Abstract

The resource curse literature shows that natural resources, particularly oil, help regime or leadership survival, but it also suggests that resource-rich countries are prone to civil wars or political instability. This article argues that the ownership structure of the oil sector matters and influences leadership survival. Specifically, foreign ownership of the oil sector raises leaders’ survival prospect and leads to more military interventions aimed to help the leader. Using data on oil ownership and leaders from 1962 to 2006 across 120 developing countries, this article finds that foreign involvement in the oil sector has a negative effect on leadership turnover. Countries with deeper foreign involvement in the oil sector are also more likely to experience military interventions on the side of the leaders. In other words, leaders of oil-producing countries do receive political support when they cooperate with and serve as ‘petro-friends’ to foreign powers.