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Tale of a short war and a long dependency on oil

Harmony in economies

A four-day war between Azerbaijan and Armenia points to a global need to help countries dependent on oil exports find new sources of wealth.

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    Ethnic-Armenian soldiers in Nagorno-Karabakh stand near a howitzer April 5 after a cease-fire ended four days of fighting between Azerbaijan and Armenian-backed forces.
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Wars between countries have become rare in the past quarter century, a result in part of better peace diplomacy. This trend, however, was marred in early April by four days of fighting between the forces of two rival nations, Azerbaijan and Armenia. Dozens were killed. While a truce was quickly arranged, the probable trigger remains. And it points to a global problem: As oil prices have fallen, leaders of oil-dependent states are taking desperate measures to survive.

Initial evidence points to Azerbaijan initiating the conflict. Its authoritarian president, Ilham Aliyev, has failed over the past decade to diversify the economy from its heavy reliance on oil exports. Protests have escalated as a recession has taken hold and inflation has risen. Per capita income has declined by almost half. Repression of dissidents has increased.

In recent months, Mr. Aliyev has escalated his rhetoric about retaking the Nagorno-Karabakh enclave, which has been under Armenian occupation for more than 20 years. Such talk could be designed to divert attention from rising poverty. “The government may feel the need to rally support around the flag,” writes Magdalena Grono of the International Crisis Group.

Azerbaijan’s apparent adventurism certainly requires the attention of the European Union, Russia, and others that have tried to mediate an end to the dispute over Nagorno-Karabakh. In the early 1990s, Armenia and Azerbaijan fought a full-scale war over the enclave that left as many as 30,000 dead. Both are now much better armed than before. The world cannot afford an even bigger war, especially one driven by Azerbaijan’s domestic mistakes.

Worldwide, countries with both an authoritarian government and a high dependency on oil revenue must take steps to find new sources of wealth. These countries range from Angola to Venezuela, many of which face escalating troubles at home as oil prices hit a 12-year low. To attract foreign investors into setting up non-oil export industries, they need to curb corruption and cronyism. Courts must be independent to ensure rule of law. Regular transfers of political power must be done through peaceful and fair elections.

Most democracies with oil bonanzas, such as Norway and Britain, have largely used their petroleum wealth to restructure their economies. Nigeria, which saw its first peaceful transfer of power to a duly elected opposition candidate last year, is now trying to do the same.

World peace relies on countries striving to build economies sustained by their own innovation and hard work. Countries that over-rely on exports of hydrocarbons without plowing the profits into productive industries need to be nudged to reform. Harmony between nations requires a measure of economic harmony within each nation.

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