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Welcome to the LSE Events podcast by the London School of Economics and Political Science. Get ready to hear from some of the most influential international figures in the social sciences.
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Welcome to LSE for this hybrid event. My name is Professor Kathryn Hostetler and I'm professor of International Development in the Department of International Development here at the LSE and I will be chairing this event. I'm very pleased to be here to welcome our in person and also online audiences. We are also being accompanied online to the Hong Kong Theater today. This event is part of our inaugural lecture series of our professors from across the school. These events are a special moment in an academic's career as it marks that they have been promoted to a professor. Congratulations, Stefan. It's a very important step. We are delighted that you can all join us as we celebrate the successes of our community. I would like to welcome our speaker, Professor Steffen Hertog. He is a Professor in Comparative Politics in the Department of government at the LSE. He joined the Department of Government in 2010 as a lecturer and he was previously Kuwait professor at Sciences PO Paris, Lecturer in Political Economy at the University of Durham and Postdoctoral Research Fellow at Princeton University. He holds an MA from the University of Bonn, an MSc from the School of Oriental and African studies and a DPhil from the University of Oxford. In this inaugural lecture, which is based on his research with Ferdinand Eibel, Stefan Hertog will argue that populist leaders I think we're familiar these days with populist leaders. That populist leaders in all but the largest countries can afford radical policies only if they enjoy autonomy from international economic constraints. The main factor providing such autonomy are natural resource rents. The combination of populist leadership and and resource rents creates a particular kind of radical foreign policy in which leaders combine sharp anti Western rhetoric and diplomacy with a withdrawal from liberal international organizations. He illustrates these arguments with case studies of Bolivia, Ecuador, Iran and Venezuela, and then demonstrates the wider applicability of their theory through a range of econometric tests. Professor Hertog identifies the combination of rents and populism as an important driver of the disintegration of the liberal international order. We are excited to explore these themes during this lecture. For anyone who wants to post about this event on X or Bluesky, the event hashtag is lsevents. This event is being recorded and will hopefully be made available as a podcast subject to no technical difficulties. As usual, there will be the chance for you to ask your questions for our online audience. You can submit your questions via the Q and A feature at the top left of your screen. Our events manager, Kay, will direct the questions to me. When we open the Q and A session, please let us know your name and affiliation. We are particularly keen to hear from our students and alumni. So make sure you let us know if you are that. For those of you here in the Hong Kong Theatre, I will let you know when we will open the floor for questions. If you can raise your hand and wait for the microphone and then provide your name and affiliation before posing your question, I will try to ensure a range of questions from both our online audience and our audience here in the theater. But now I am delighted to hand it over to Professor Stefan Hert.
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Thanks so much, Kathy. Thanks so much for coming out in such great numbers when the weather's so inclement. I should say that when I was asked to give the lecture, I was thinking about whether I should talk about sort of a summary of some of the research I've been doing during the last 20 years, which I think what is usually done in an overall lecture. What I chose to do instead is to talk about ongoing research in progress that's actually largely new for me on cases that I actually don't know that well in a way that's much more exploratory. And as I stand here in front of you, I'm sort of having second thoughts about whether that was such a great idea. But we'll see how it goes as I go along. We've got very high caliber Latin America expert here with Kathy, so she can correct me at any point if I blather any nonsense about Ecuador, Venezuela or Bolivia. So let me see whether this pointer here works. Oops, I turned this off. It's back. So the motivation for this project, which actually goes back quite a bit, which I started like almost a decade ago, and the co author in which is Ferdinand Eibel from King's College, who's not here tonight, but he's been very instrumental in that work too. It was that in the mid, early to mid 2010s there was this new cohort, this new phalanx of very radical leaders in the global south that started challenging the west, liberal international institutions, liberal norms in quite a concerted way. So people like Ahmadinejad in Iran, Hugo Chavez in Venezuela, Gaddafi also in Libya before he was, before he was removed from power. He had a longer history of doing that. But some of his sort of anti hegemonic, anti Western policies made a comeback in the mid 2000s. And also leaders of Bolivia and of Ecuador. And what all of them had in common was that they came from oil rich countries. Right? So that's how this hypothesis was born, that perhaps there's something about being rent abundant, about having high natural resource income that enables you to engage in certain types of radical foreign policy that otherwise you couldn't. But then, you know, this project went through many, many iterations and we then more strongly embedded it in literature and puzzles around populism in particular, which is a very topical issue right now. And it originally was a purely qualitative kind of case study project. And since then we've thrown in a lot of statistics and ethical metrics which I'll have to bore you with also at some point for a few minutes tonight. So what I do is very quickly map out the theory about what we know about oil and foreign policy, or natural resource and foreign policy, about what literature thinks, the foreign policy dimensions of populist leadership. And there's a growing literature on that, that populists, although it's mostly a domestic phenomenon, have a particular style of foreign policy. Then we combine these two into our argument. I'll give you a little bit of illustrative case evidence, mostly from Ecuador, a little bit from the other three cases, and then I'll run you through some quantitative regression results and then you can pepper me with questions about current events in Venezuela, which I know very little about, but which might be what made some of you show up tonight. But I do my best. So there is a growing literature on populism and foreign policy, but so far the empirical findings in that literature are quite mixed. So a lot of null findings saying that while populists, they talk a big game, but they actually don't behave very differently in foreign policy, they actually don't take high risk actions, they don't withdraw from institutions, they don't directly attack in any way the kind of hegemonic large powers of the day. And at the same time, there was anecdotally always this class of cases, particularly Venezuela and Iran, that are generally classified as poor. I mean, you can dispute that, but I think they fit the paradigm that I'll expound on later on rather well as countries that have actually pursued very radical foreign policies and those both happen to be oil rich. But beyond this kind of anecdotal point in some of the literature that those people, those leaders, could get away with radical steps because of oil, there's never been a systematic test of that kind of hypothesis. Although understanding what enables populists to really challenge international norms, Western powers The liberal order, I think, is a fundamental part of the puzzle of the integration, sorry, the disintegration of that order that we've witnessed during the last 10 years and increasingly quickly. So during the last year or two. So our basic argument is that populist political leadership can be empowered by hydrocarbon strengths, by oil and gas income to pursue very costly anti Western foreign policy, that all populist leaders would like to do that in principle, but it's only the ones that have those resources to back them up that can get away with it, that can absorb the costs that come with a kind of rallying foreign policy. So that's the argument in a nutshell, a little bit of theory on oil and foreign policy in general. So there's existing work that finds that countries that depend more strongly on oil exports withdraw or engage less in institutionalized corporations. There are members in fewer international organizations. For example, Ross and Ferdinand made arguments that it's just less costly to do that because you don't need access to foreign markets. You don't need to guarantee access to your country for FDI because oil and gas exports in particular, oil is freely traded internationally, you don't need a free trade agreement to be able to sell it, and you don't need foreign investment outside of the oil sector to keep your economy afloat. Then there's a very interesting mixed methods work by Jeff Colgan, who argues that a particular type of leader, namely leaders with a revolutionary background, like Gaddafi in Libya, like Saddam Hussein in Iraq, if combined with oil rents, create a much higher likelihood of interstate war. So if you're a revolutionary leader with those types of resources, you can again, you can afford to engage in foreign adventures that other leaders couldn't. So that's sort of closer to our argument, although the kind of class of behaviors that we look at is broader. And the type of leader that we look at is also a broader category. Now, below all this is a theory of what oil does to leadership more broadly or to regime autonomy. So there's a classical, very old argument and what's called Grandier State theory, saying that, well, broadly speaking, colloquially, if you have oil, you can do all sorts of things that you couldn't do without. You said you have more autonomy, you can buy political opponents, you can buy off political opponents more easily, thereby removing constraints on you. You can repress more easily. You got resources to pay for large security apparatus, which again potentially gives you more political autonomy to do what you want. And you also don't need to tax people or businesses, households domestically, which Again makes you relatively more independent from your domestic economic base. And this goes back all the way to Mahdawi in 1970 writing about Iran. And Colgan then built on that kind of argument in his book about revolutionary leadership, oil and interstate war. There's a little bit of literature on oil and foreign policy that builds on that and goes into bridge broadly the direction in which our paper goes. So Ross and Wurten, who I already mentioned, they argue that, well, if you have sufficient international oil income, you don't really need non oil fdi, you don't need investment inflows, you don't need to pay nice to attract investors. You can do all sorts of risky stuff because your current account or your capital account is going to be in balance, it's going to be in surplus because of the oil exports. So you do need other types of capital. Oil is also freely traded. You don't need free trade agreements, you don't need complicated negotiations with the European Union or regional free trade zones because oil is pretty much a non tariff good everywhere. Everyone's willing to buy your oil on the internationally integrated market. Now we see one more dimension that's not been theorized yet, in which hydrocarbons income, so both oil and gas increase your autonomy. And that is you're not constrained by or you're less constrained by portfolio capital flows. So it's not only about foreign direct investment, it's also about other types of debt flows. For example, your current and your fiscal accounts are easier to finance without foreign capital. So you can do things that scare off foreign investors. You know, your credit rating might go up, but you'll have enough inflows through selling those hydrocarbons to offset that potentially. There's already some interesting work on Latin America showing that similar mechanisms are in operation with regard to domestic policy, particularly some more radical economic policies. There's nice literature by Campello, for example, who shows that a lot of leftist leaders in Latin America started often on a campaign trail in the election season with very radical proposals. Then the ham of the markets came down on them. There was capital flight, sovereign ratings went up and then they started behaving, they became much more mainstream, much more sort of neoliberal in the economic policy. So Lula in Brazil is a prominent example, but there are a couple of others because Brazil, I mean, is a resource exporter, but it's not like a huge rankier state the way that historically Venezuela, on a smaller scale, Ecuador and Bolivia would have been so much more subject to this kind of international market constraints. And Thereby constraint in the degree of domestic economic policy radicalism. So when they talked about soaking the rich, nationalizing foreign enterprises, stuff like that, they very, very quickly had to backtrack from that because those various constraints kicked in. FDI stayed away, Portfolio capital at least threatened to leave the country. These kinds of constraints apply either not at all or much less in oil rich countries. Okay, now for the probably more current and more interesting theoretical bit, populism and foreign policy. So rents arguably loosen constraints, but they don't tell us what leaders do when those constraints loosen. They could do all kinds of things with that autonomy. But there's an emerging literature on populism and foreign policy that can give us insights on preferences of that particular type of leader that they can then potentially act on if those constraints are removed. It's the most important current ideological challenge to Western political establishments, to the liberal norms and institutions, both domestically and in the international realm. So I think it's quite an important piece of the puzzle that we have here that potentially explains some of the decline of this liberal order. Now, populism is a contested concept, and I don't want to get into the definition in too much detail, but the sort of minimal definition that most people agree on, which is that it's a highly personalized political movement focused around a relative political outsiders espousing a stridently anti elitist discourse. And we recognize that this fits some of the most prominent leaders of the present day quite well. But it's sort of a template that captures the essence of what's going on in political leadership in a range of otherwise very different countries, and I think is therefore quite useful. Okay, so there are some features of populism as a primarily domestic phenomenon that potentially carry into foreign policy in a quite intuitive way. So one thing that populism does is to, or claims to do is to mobilize popular masses, often a unified people. It's always about the people against established elites, you know, against corrupt, detached, supposedly undemocratic, unaccountable elites which are portrayed as self serving. So very much a kind of Trump, you know, Le Pen Orban type discourse. A corollary of that is that populist movements reject established institutions because they think of those institutions as sort of the embodied interests of these elites. They in their view, designed to stymie the popular will embodied by the leaders. So institutions have to be removed so that the leader can directly act on the will of the unified people. So they try to bypass or abolish them and the liberal constraints they impose. So, you know, Everything almost that Trump does is legible against this background. Everything that he does with the judicial system, with this war on the bureaucracy, on supposed deep state, that's a populist kind of campaign against established institutions that are sort of assimilated in the mind of populists with those corrupt detached elite interests. Now how does that carry over into foreign policy? Theoretically, that actually works quite well because even some populist discourse is framed against the background of international politics. So a lot of the populist backlash against migration, against economic crisis supposedly or really caused by globalization, they're very much affiliated in that type of rhetoric with international rail. And it's very easy to project the anti elite attitudes of populace onto foreign policy and to assimilate the domestic elites that populists rail against with international elites, with IMF elites, with financial elites, with World bank elites, with liberal UN elites. There's a continuum in the kind of populist discourse that runs from decrying the dominance of unaccountable domestic elites and how they're in cahoots with all range of foreign elites. And similarly, the same argument works for international organizations. Right. A lot of populists don't own rail against supreme courts and independent regulators and electoral authorities and all those domestic institutions that constrain their power, but they also rail against the IMF and the World bank and the EU very prominently in Europe. So again, there's a sort of continuum of institutions that they see as anti democratic and working against the people that ranges from domestic to international institutions. So you would expect population populace to carry all these attitudes into their foreign policy. That's certainly the theory, but the question is how well this works in practice. Yeah, just some more citations from the literature on the rejection of established institutions. So especially supranational institutions that have some that impose a real constraint on domestic policy, like the EU or like certain, for example, investment regulation or investment investment dispute settlement institutions that constrain domestic policy in a substantive way, those are often the target of populist discourse. So populism is sovereignty. They say that we need full sovereignty so that the will of our people can be implemented. We can't be constrained by those alien remote institutions run by global elites. And that's true about both leftist and right wing populists. So you will find that in the discourse of Orban as well in the discourse of Chavez. So putting the two bits together, the argument which I already pretty much made is that the combination of these type of populist preferences with oil rinse that create the ability to act on those preferences. Explain why only some populist leaders, why only some populist regimes engage in radical foreign policy, namely the ones that command significant, significant hydrocarbon rents or resource flows. So from that follow those three hypotheses that we have here. The first one being oil rents enable populist governments to take foreign policy positions that are antagonistic to major Western powers. The second one being oil rents enable populist governments to withdraw from international institutions. So the major Western powers we take here as sort of a proxy for established global elites in the view of populists. And then thirdly, that these effects will be stronger for oil rich populists than for populist countries without significant oil rates. Okay, so then in the paper, which I'm by the way, happy to share with anyone, which has a lot of technical stuff in there, but also some quite nice case narratives because all these are very colorful. They're very interesting figures. All those leaders use very flowery language and say really crazy stuff about America being the Great Satan and really very, very expansive rhetoric. That's nothing else quite, quite fun to read about. So in those case studies, we then find qualitatively that, I mean, unsurprisingly, our theory works quite well, at least in terms of internal validity for those four cases. First of all, I should say that Iran, Venezuela, Ecuador and Bolivia, they're all identified as populist in a wide range of literature. So we haven't come up with this. It's sort of a classification that is broadly accepted, not universally for Iran, but I think it still actually fits the template quite well. Under Ahmadinejad, the President, in the mid-2000s, they all stepped up anti US rhetoric and anti Western rhetoric more broadly. When their oil rents increased in the 2000s, they did things like offering asylum to Edward Snowden for or Julian Assange. They expelled US diplomats, they nationalized foreign assets, and they also withdrew from a number of established international institutions, particularly investment settlement type of panels, but also the World bank, the IMF and various other regional institutions. Also a regional human rights institution that was seen as putting undue constraint on these countries or the people in these countries. All the while in other Latin American countries that had leaders with, in some cases more radical biographies but didn't have rins, there was a great moderation of policies. So Luga in Paraguay, Lula in Brazil, Mukica in Uruguay, Humala and Peru, they all were seen as kind of proto populist. They would potentially be more radical than Chavez in terms of their biography, but none of them then acted out like Chavez eventually did. So a couple more pieces of evidence that the theory is really at work. One is that if you look at the discourse of those leaders, they really substantially linked domestic and foreign sea policy dimensions of populism. So they really assimilated domestic elites with foreign elites and railed against the two of them as sort of one conjuries of enemies of the people. Correa in Ecuador, he railed against dictatorship of international bureaucracies. Then there's also variation over time in how radically those regimes behaved and how much oil rents they had. So you see that quite nicely in the case of Ecuador, where, you know, Korea got elected in 2007, I think at a time when oil rents as a share of GDP were significantly elevated, also when they were elevated in absolute terms. And then also the most radical measures were usually taken when oil events were quite high. And then when he was replaced by a handpicked successor, Moreno, that handpicked successor turned around and actually reversed a lot of radical policies. At a time when there was a fiscal crisis, there was a current account crisis, the country had to go back to international markets to raise debt. And suddenly all those radical measures became very costly. You also see that here, here with government debt levels, he got elected at a time when because of gas rents, debt as share of GDP was dropping very fast. Then he did some of the most radical things of his whole tenure. Deliberate sovereign default on foreign debt, although they could have easily repaid it. Withdrawal from this investment conflict settlement panel at a time when debt was the lowest, and then at a time when debt was increasing again, a lot of the measures, or pretty all of the substantive measures were reversed. And you'd have similar graphs for all the other three cases. You have the same also with current account surpluses, showing that this might also be a constraining or enabling mechanism. And you also had radical foreign policy imposing real costs. So in all of those cases, sovereign ratings went up, credit ratings were downgraded, there was a collapse of fdi, there was loss of market access because they would either unilaterally repudiate trade agreements with major western powers or they would get thrown out of them. So all types of consequences that probably would have been too costly to any country without those large rent inflows. And finally, there's also some nice discursive evidence that leaders and technocrats in those countries were actually aware of the way in which resources did empower them. So if you read through Ecuador's development plan, you find explicit mentions that resources given bargaining Power and the control over those resources allows the country to increase degrees of freedom in relation with global powers, which is pretty much the kind of mechanism that we're talking about here. Another measure of the kind of costs imposed by radical policies. So fdi, although it fluctuated a lot before Korea, it pretty much collapsed. Foreign investment inflows pretty much collapsed after he took various radical measures. It didn't recover right away afterwards because foreign investors were still a bit traumatized from what happened. But certainly all those measures that were taken here were taken with a view to re attracting FDI again. Okay, so that's the original core of the paper and there are very long case studies on all these four countries that I very happy for you to read. If you want to get a PDF copy of the paper. What we also did, with a view to hopefully getting published in a nice journal, is to run all sorts of statistical models to prove that this kind of correlation works on a global sample of countries. So the basic model that we have, and I won't get into the technicalities, is an error correction model that essentially tracks how the interaction of populism with oil rents correlates over time with various proxies of radical foreign policy behavior and populism. We take an existing data set from a chap called Kenny, who has coded 92 countries as populist and non populist at different times, expanded that data set, focusing on the years 1990 to 2015. So the core model is relatively old, old data, but it captures kind of the key years of populism of the type that we're interested in and the post Cold War era, because that's the era of liberal higamund. Right before that you had a bipolar system where the dynamics of foreign policy were different, where you could do radical things. If so, the Soviet Union was your patron, but post 1990, doing that was a more costly thing to do, kind of pitching yourself against the unipolar US dominated liberal order. And we've got a couple of control variables in those models. Any question on technicalities? We can cover those later. But here are the five outcome variables that we're looking at. One is the distance of a country's votes in the United Nations General assembly from the ideal point of the US So how different are your votes in this most prominent and highest universal body of the UN from how the Americans vote? And the folks who've put together that data set, they themselves say that this kind of US ideal point vote measure that they've created is the single dimension that reflects whoops state positions towards the net liberal order. So it's exactly kind of what we need. The further you're away from that, the more you reject the US we also do the same thing for the G7 and the EU as other prominent Western powers. We look then at a variable that we create ourselves using natural language processing and that is the percentage of sovereignties and anti interventionist rhetoric. So we ran an unsupervised LLM. I see the first of you dozing away in the audience. It's a. Well, AI is too big a word, but it's a machine learning model that figures out which kind of different clusters of words occur together in essentially all of the speeches made by all of the countries in the General assembly up to 2022. And we found one particular combination of words, one particular cluster that we labeled sovereignties because it has all those references that we think relate to leaders or diplomats essentially talking about national independence, fighting back against foreign intervention, fighting back against hegemonic powers that try to control what's going on in the country. So we got imperialism in there. Those are just the word stems, right? So you have imperial imperi here so that it picks up imperialism, imperialist, everything that's related to the that word stem dominant for dominance, like foreign dominance. America's in their aggression, struggle, nation, power, people. Obviously the people is probably the most central concept in populism. So we think that this reflects people talking about reclaiming sovereignty against sort of foreign encroachment. And it's the percentage of how much of that type of rhetoric is in a given speech by a given country in a given year. That's the variable that we're looking at here. And then those are sort of tokens of anti elite rhetoric, anti Western positions in the international realm. We got three more variables to pick up the rejection of institutions and institutional constraints in particular. So we got the number of signed bilateral investment treaties. We think those are important because those tend to be the economic treaties that impose the harshest influence institutional constraints on a national economy more than regular kind of free trade agreements. Because they usually give some degree of almost extra territorial power to foreign investors and they protect their property rights. They create sort of dispute settlement mechanisms that are often extraterritorial. You know, they say that, oh, if we disagree with that investor, then there's going to be some technocrats, some judge in some tribunal in London that's going to decide about this. So it's a real investment potentially on sovereignty. We also look at the average civil and political rights score for all trade treaties, a country is part two in any given year, thinking of civil and political rights as so the liberal institutional constraint that populists don't necessarily like. And finally, we look at withdrawal from international organizations. That's just a binary variable. So for every any given year, it takes the value of one, if a country is withdrawn from any institution, that of zero, if it hasn't withdrawn. So what we do find is. Oh, pray, I gotta explain those graphs. I gotta take a minute to walk you through them. Broadly speaking, if you're a populist and you have oil or you have natural resources, however measured, measured in a couple of ways, then we do have the expected effects on oil, all of these five variables. And if you're a populist without resources, then usually there's a null effect. There's no difference between a populist without oil and a non populist still without oil. Now this is what's called a margins plot and it shows the marginal impact of becoming a populist on any given outcome. So zero is just if you're here, then there's no effect anywhere along this line. And what we vary on the x axis is how resource rich the country is in our database. So if you're down here, then this line shows you. If you're populist but you have no resources, then you have essentially a zero effect. Doesn't make a difference if you're a populist or not. If you're over here and you turn populist, where you elect a populist leader or you have a coup that puts a populist leader into power, then you have quite a strong positive effect here. In that case, you vote or your country votes much differently from the US in the United Nations General assembly, whereas it doesn't if you're populist and you don't have oil. So those are a little bit involved because they're based on statistical interactions. But that's the basic story down here. Populace without oil, no effect. Over here, populace with oil, quite a strong effect. Same with voting relative to the G7, same with voting relative to the EU. And same also regarding the sovereignties rhetoric, NLP variable. So if you, if you're populist but you don't have oil, your rhetoric in that regard is kind of like everyone else's. If you have oil, then you talk about that sort of stuff quite a lot and the effects are substantial. They're substantially important for all of the variables. So they are like a high level of friends, something like a standard deviation above the average, which means in layman's terms, it explains quite a lot of the differences across countries. Number of signed bilateral investment treaties goes down again quite strongly and significantly if you're a population with oil. If you're populist without oil doesn't make a difference. And this is the average civil and political rights content of treaties also goes down. Although that big shaded area tells you that we can't be sure that the effect is statistically significant. So that's the basic statistical story. And oh yeah, I o withdrawal. So with a country withdraws from any international OWL organization any year, again, essentially the same story. And this is mostly driven by withdrawal from economic international organizations rather than human rights international organizations, which just suggests to our mind that resource rents allow populist leaders exit from institutions that would otherwise be untenable because of their economic costs. Right. If you withdraw from free trade agreements, that sort of stuff, you can stomach that much more easily. Easily if you got oil events to keep your economy and your fiscal count afloat. Whole range of and this is the second to last slide, a whole range of robustness tests and extensions. So we've extended the sample into the early 2000s. So that's at least the first Trump administration covered. The core results hold up. But it doesn't necessarily mean that 2016-2020 was. It was the same. We don't have enough statistical power to just assess what happened in that particular time window. But the period as a whole at least still is explained with the same kind of regularity. Is taking OECD countries in and out. You know, assuming that perhaps the story that we tell is just a Global south story, that doesn't make a difference. We use a number of alternative resource variables. We throw in a number of additional control variables. We use a diff in diff research design as of the error correction models, very similar results. And then perhaps substantively more interesting, we also find that populist governments with high resource rents are significantly more likely to be targeted with sanctions. So that's another aspect of the kind of cost story. So what they do is actually costly people really the international powers, the eu, the US they really go after them and sanction these countries. But we argue it's something they can bear the cost off because of the continued resource flow. Of course, at the most extreme end of sanctions, if your oil exports are sanctions, like in the case of Iran under US pressure, that's a different story. But most sanctions fall far short of that. Most countries that are under sanctions are still allowed to sell their oil. So there's a limit to how much you can get away with. If you get into open war with the United States, then the oil banks are not going to help you a huge amount. As we've seen recently, rents without populism do not have a systematic effect on foreign policy. That's also important. So what we see there is not a general rent effect. It's not just that all countries with oil just do these things. It's really just populist countries with oil that do these things. And finally, fiscal deficits and current accounts are pluses. When we interact with populism the way in our main model we interact with interact resource friends with populism, they have very similar effects. So that suggests at least so descriptively that these act as causal channels. So it's the fact that you have lower fiscal deficits or fiscal surpluses and you have current account surpluses that allow you to do all these provocative high cost things if you're an oil rich country. And then I'm not going to talk about heterogeneity, but if you get questions about there, we can do that in the Q and A very quick summary. So not since the age of third Worldism and the new world economic order type of discourse in the 60s and 70s when you're the non aligned movement and the G77 were trying to challenge the international Western order. Not since that era have smaller countries in particular from the global south challenged liberal international international order like our cases did from so the mid to late 2000s on. So it is even if we think of it as a historical sort of episode that might be over now. It's quite significant because it was in an era of general liberal hegemony where otherwise everyone else played along with US generated or Western enforced rules with the exception of some kind of communist holdovers. But they were very much in defense that didn't kind of actively try to challenge the West. So even I think historically it's a significant story. We got broad evidence that populist oil exporters systematically take anti Western positions. They withdraw from international institutions that constrain their sovereignty and critically that populace without oil do not do those things systematically. Right. So you have all these null effects for the Orban types who might talk a big game domestically, but then actually don't do very high cost or provocative things in the international realm at least if you believe our results. And I think this addresses critically the puzzle that there are so many mixed and null results in the general foreign policy literature on populism so we actually say that, well, you have to unpack populist foreign policy. There's one class of cases that behaves very differently from another class of cases. And the average effect, it doesn't necessarily tell you about very last slide about relevance. Probably some of you are a bit disappointed. I talked so much about what happened 10 or 15 years ago and it's true that for now, this kind of wave of challenge to the liberal international order coming out of the global south, it has subsided both because hydrocarbons prices have been down since 2014, so a lot of those countries are now deficit countries. And then Trump has appeared and is himself dismantling the liberal global order. So there's not potentially that much to rail against even for either left or right wing populists. But we still believe that the general insight that rents reduced the cost of challenging any kind of hegemonic arrangement, that this is still true. We also believe that there are many remaining vestiges of the liberal technocratic order that, that are still out there, that still operate outside of the US realm, perhaps increasingly. And they are very consequential in the global South. So imf, the World bank, international investment, dispute settlement bodies, they are still quite consequential, even if Trump himself is not interested in them. And in principle rents still allow you to challenge those. And a lot of people watching the oil market closely believe that we're sort of at the trough, the lowest point of a commodity super cycle, but that in a few years we could have very high oil prices again. So that'll be the point when the theory gets tested one more time. When there are big surplus countries that can afford to get away with high risk policies. What's going to happen next? Perhaps it won't be the same type of populism. They might be doing other things. But if you look at generally at sort of high risk, unusual foreign policy behavior of some oil vegetation countries, you know, if it's the high risk diplomacy by Gaddafi and Libya historically, or the UAE's campaign of subversion and supporting all sorts of non state secessionist groups all over the Middle east, those are activities that those countries couldn't get away with if they hadn't, they didn't have very high rent surpluses, you could make similar arguments about some of the overseas investments that's made, that's undertaken by some oil source stays and they're very risky, very loss making. And again, you can only get away with these types of activities if you're willing and able to absorb very large costs. So that's a bit open ended. So we don't quite know what's next, but I don't think that the story is quite over yet. Thanks. Thank you.
- [40:59]
A
Hi, I'm interrupting this event to tell you about another awesome LSE podcast that we think you'd enjoy. Lseiq asks social scientists and other experts to answer one intelligent question like why do people believe in conspiracy theories? Or can we afford the super rich? Come check us out. Just search for lseiq wherever you get your podcasts. Now back to the event.
- [41:33]
B
Thank you so much for your presentation, Stefan. That was very, very interesting and I was taking notes because some of this is going to go straight into my lecture for my course next Tuesday. So very, very useful and interesting and provocative research. We will now open the floor to questions from the audience both here and online. I see hands starting to go up already. I'm noting them. If you are online, please type short questions into the Q and A box and we'll try to answer as many as possible after doing a round or two of questions from the floor here. Please, if possible include your name and affiliation and for those of you here, if you could, raise your hand and I'll select questions in rounds. And again, please keep your questions short and to the point where possible and identify yourselves. So I saw. Maybe I'll start there. I see three hands. So in the back there and then in front of him. No, you'll be the second. And then there was a hand over here for the third. Yes, the camel sweater.
- [42:36]
D
Hi, I'm a current master student of Yealesy. Really interesting lecture. Thank you so much.
- [42:41]
E
I just had a question on since.
- [42:44]
D
On Venezuela, since Venezuela is one of the has the largest proven oil reserves.
- [42:49]
E
Do you think like, do you think the regime will try and play into.
- [42:54]
D
This strength in terms of negotiations with Trump? Does that feed into this kind of.
- [42:59]
E
What you've evidenced in your research?
- [43:01]
C
Thank you.
- [43:03]
B
Do you want to answer just that one or do you want me to take.
- [43:05]
C
How big is the queue? What do you think?
- [43:07]
B
It's not a long queue.
- [43:09]
A
Why don't you go ahead with that one then?
- [43:10]
B
We'll go next to you, sir.
- [43:11]
C
Yeah, so probably a better place to answer that actually than I am, but I think what happened Venezuela was sort of a late unintended consequence of the high risk strategies that Chavez pursued when he had very large resources. But even if you look at Chavez sort of arc himself, he became more risk averse, more careful and invested less in radical policy when the oil rents went down and particularly when the oil sector in Venezuela was quite badly mismanaged and then rents collapsed, not only because prices went down, but because they also couldn't produce anymore. I think Venezuela kind of turned itself into something that's more akin to North Korea or Cuba, where it's sort of a holdover, vestige of a previous period, rather than being sort of an active challenger to American hegemony. I think they just boxed themselves into a corner where they couldn't get out anymore. But they didn't. They really, I think, lost their ideological project. Right. I mean, Chavez had a big regional project. He had Albay. He had deep cooperation and aid arrangements with all sorts of countries across Latin America. He was funding movements and had big aid operations in places like Nicaragua, which he tried to bring into his camp. And when they ran out of money, all of that kind of stopped. At the end, it was just sort of a failed rogue state, not unlike Cuba, just with less state capacity. So I think what we see now is more Chavez kind of overplaying his hand historically and then the whole regime not being able to sufficiently maneuver out of that situation if they would have wanted to. I don't know what you're.
- [44:46]
B
I think that's right. I mean, I think the. Well, I mean, I think you'd have to talk about the fact that even, even though other countries have a lot of oil revenues, Venezuela has not. Its production has really dropped out. So in many ways, even though it's an oil producer, it doesn't have the kind of ability to really play in the international system without hazard as it's finding now. So I think that's right. Next question.
- [45:10]
F
Thank you. My name is Eli, I'm a regular visitor here. My question is about terminology. I sound pedantic, but I'm familiar with the rentier economy usually associated with oil. But oil rent is new on me. Why oil and why rent? Do you mean oil rich oil wealth or what in the good old days we used to call petrodollars, which is more accurate? Oil includes cooking oil, olive oil, etc. Etc. Whereas the petrol is the one that is used for internal combustion engine. So I would like an explanation on the choice of this term, particularly each word individually and the term. And what exactly do you mean by oil rent? Thank you.
- [46:05]
C
The acoustics were a bit challenging, but I'll try to answer what I picked up. I think it's right that oil rich just having large reserves in absolute terms or large reserves of production per capita doesn't automatically mean that you have reduced constraints so what has to happen is that these kind of riches or the hydrocarbons production has to be translated into revenue and that revenue has to push you into a surplus situation. So if you have, even if you have a lot of revenue, but you spend all of it with abandon and you create deficits, then you at the end of the day be as dependent on the international system as a non oil producer. So what we're really looking at is countries in a phase when they incur very, very large surpluses. You could also get surpluses through other channels. It's just that empirically speaking, the largest fiscal and current account surpluses tend to be generated through commodity booms because of the huge volatility of that kind of resource. But it could arguably be sort of transient phenomenon to the extent that state spending then catches up with this extra revenue, as it has to some extent in Ecuador, Bolivia and Venezuela. And then automatically your autonomy declines because suddenly then you need all the money and suddenly you find out, oh, perhaps we do need foreign investment or we have to, we have to raise foreign debt to keep our operations going. So it's kind of the most intense briefly after a boom in the very large surpluses and you kind of think, think you're on top of the world, as I think Chavez did at some point.
- [47:38]
B
Okay, thank you. The next one is there and then you are next on my list and then you after that.
- [47:46]
G
Hi, I'm Rita, I'm a journalist. So you talked mainly about oil and hydrocarbons, but I was wondering if the same thing would go for any natural resource that a country is rich in. So for example, would a populist leader with a very iron ore rich economy, or copper or anything else, would they act the same as these populist and oil rich countries?
- [48:09]
C
Yeah. Or is there something specific? It works for all sorts of natural resources. And if I'd done my homework, I would have some spare slides showing you the same models with minerals, but I haven't. But I can tell you that directionally we see the same effects if we only look at, at non hydrocarbon natural resources. But it's very, very fuzzy. So we can't be sure that we're really statistically picking up anything, which is just because in terms of orders of magnitude, there's nothing like hydrocarbon's wealth. Right. So the variation in that variable is just much larger than the variation in whatever copper income or diamond income or something like this. So probably yes, but unlikely to have the same kind of scale in terms of its consequences. Okay, thank you.
- [48:58]
G
I'm actually following on from Rita's question just now. So talk about other forms of resources. Your lecture was focusing on hydrocarbons. We have Trump today at the World Economic Forum, you know, declaring quite savage interest in Greenland. So in terms of your theory, do you think that sort of what you've sort of profiled would fit Trump sort of the USA under Trump in terms of a populist leader with a large oil base who is increasingly acting really quite left field, erratically pushing back very much against international institutions as he's doing literally right now or a couple of hours ago, not to mention calling in the shots on NATO, et cetera. So does it fit your theory?
- [49:49]
C
So there's a lot of reverb, but was it about whether the theory applies to the US As a hydrocarbon? Okay, great. I think it's primarily a theory of small to mid sized powers because those are the powers who otherwise are the most constrained by the international system. Right. Ecuador, Bolivia, they can't get away with crazy stuff because they don't have a lot of military force without their hydrocarbons exports that depend on foreign capital, aid, market access, all these things. I think if you're the United States, you can get away with all sorts of stuff even if you didn't have large oil exports. Like I mean, look at China for example, where you know, has a very expansive, in some cases very aggressive foreign policy, although it's a huge hydrocarbons deficit country. But that's just because it's got the second largest economy in the world, a huge industrial base and a very large army. So probably Trump gets a bit of an extra boost from the US being a net or close to a net hydrocarbons exporter. Because if say it was a strongly hydrocarbons deficit country as it was before the shale oil boom, then some of the international adventurism of Trump would probably be a bit more costly. It push up oil prices, prices a bit more. But I think it's sort of on the margin. I mean the Americans had no trouble invading Iraq even when there were hydrocarbons deficit countries. So I think at that scale of power there's different, largely different forces at play. It's more about small guys getting away with.
- [51:16]
B
I just wanted to follow up on that a little bit because I think actually maybe it's that the part of your framework that is most useful for understanding the Trump is actually the populist side of it. More than the oil revenues. The US Excuse my American accent, but the US Kind of always has that kind of Scale of autonomy. But not all US Presidents choose to do with the Trump administration has choosing to do. And he's choosing to do it because he's a particular kind of populist. So I think that might be right. There was the hand, was there?
- [51:45]
F
Yep.
- [51:46]
B
And then there was one over here. And then I see you here.
- [51:49]
E
Thank you. That was very interesting. You kind of showed how populous countries naturally go hand in hand with anti Western foreign policy. This is until they don't have oil rents and therefore they are shackled and not able to pursue their natural inclination that is there. Can you draw any implications of this on the effectiveness of a sanctions regime rather that's against oil rents or any other natural wealth of commodity that's. That's there.
- [52:20]
C
So what's the question about whether once they get sanctioned, the whether you can.
- [52:25]
E
Draw implications from your research onto the effectiveness of a sanctions regime in curtailing a natural inclination towards anti Western foreign policy?
- [52:36]
C
So we haven't quite directly tested it, but I think the model that we have showing that that levels of sanctions are higher for countries that are populist and oil rich suggests that they're able to withstand some pressure of sanctions, at least. Right. Otherwise I don't think those sanctions would happen in the first place. I think anecdotally, to the extent that sanctions in those countries had any meaningful impact, it usually was when they were kind of running out of money. Right. So unless you're talking about very strong sanctions where you get completely frozen out of the dollar system, where the oil sector itself is sanctioned, as in the case with Venezuela recently or Iran, I think if it's just regular trade sanctions, if it's sanctions against some members of the economic elite, then those tend to be relatively ineffective just because they don't go for the jugular, they don't hit. So the core resource streams in those countries.
- [53:31]
B
Okay, and then the next question was over there and I see the hand in the back. I'll come back to the middle and then back to you.
- [53:37]
E
Thank you. Professor Hertog, My main question was, apart from foreign policy conflict, what other variables did you notice in the behaviors of populist governments that came through democratic means and those that came via revolutionary means?
- [53:53]
C
Yeah, that's a very big question. There's obviously a huge and quickly growing literature on populism. I think I don't have anything really interesting to say beyond what was in the kind of domestic policy bit of the slides, which is that there's very Manichean, very aggressive rhetoric. It's all about the People, as embodied by the leaders of populism, is always about a strong man. I'm not sure there's a popular, strong woman anywhere. I mean, perhaps the Khalid Aziya in Bangladesh might come closest, but it's always about that person embodying in some magical way the popular will and fighting on behalf of the people against the elites and populists, then thriving on that kind of polarization. Populists do outrageous things, but it benefits them because then it makes sort of established liberal leaders, so everyone who is against them become more incensed and more mobilized. And then the populist leader can point out that, look, you know, those people are after us, they're after me, and I'm the representative of your interests. So they thrive in the kind of polarization that they themselves create, which is, I think, the baleful sort of vicious cycle that when, you know, all the outrage that Trump generates in many ways benefits him. Right, because then the liberals who get upset about this and the more mobilized parts of the progressive elite, they just provide them more of a foil for the populist leader to operate against. And then there's all the other stuff about dismantling institutions and institutional constraints and checks and balances, which Trump is a textbook case of and has gone much further than almost anyone would have expected.
- [55:28]
E
Apologies, just to clarify within your study, so oil rich hydrocarbon populist governments that came via Democratic means vs oil rich hydrocarbon populist government that came out through oil?
- [55:41]
C
That's a good question. Well, they can do more stuff domestically with their resources. Like Chavez, for example, could finance a lot more programs for his followers, and he could also engage in institutional experiments where he would abolish certain organizations, certain parts of the technocracy, in a way that would be very costly if he didn't have resource streams to draw on. A really extreme example of this is Gaddafi, who I think is also sort of popular or was a sort of populist, although he's sort of on the margin, who officially declared, I'm abolishing the state. You know, the state is sort of a bourgeois construct. I want some kind of bottom up republic of independent committees, and then dismantled large parts of the state bureaucracy. No one could have afforded such a radical experiment if they hadn't had, well, a security apparatus that's financed by oil and a lot of oil money to use for patronage to still, you know, informally keep the system going. Of course, what Chavez did was to push too hard. He threw out all the old technocratic elites from Perry, Vesa, from the national oil company to a point that the oil sector collapsed. So that was a bit stupid. But you know, as long as he had money in the bank, he could also do quite radical domestic distributional policies that a non, A non grantee populist couldn't have undertaken.
- [56:56]
B
Just one more example that in Bolivia and Ecuador and Venezuela, all three of those countries, the populist presidents oversaw the rewriting of constitutions and really substantial rearrangement of national institutions. So that's also something they can do because they have the revenues, as you say, to either buy supporters or punish non supporters. So the next hand is right here in the middle. I don't know if you're the closest to bring him the. There's nobody. Maybe from the front. Take it back from the front.
- [57:28]
D
Hi.
- [57:29]
C
Thank you. My name is Juan, I'm an alumni here at the lse. My question is if you consider that where those oil barrels were going mattered somehow. If. Because what you'll kind of see in the case of Venezuela is that even though the US continues to be the biggest pressure oil barrels the percentage start to Greece and got it more into China, into Indian refineries. And do you consider where those barrels were going allow them to become more aggressive in their foreign policy? I'm not sure that I think the issue is anyone in the middle creates revert between the windows and the wall and it's all awash. So I think. I don't know whether we have to take questions from the sides only.
- [58:19]
B
Could you. Could you try to repeat maybe without the amplification actually without the mic.
- [58:24]
C
If you just shout at me I'll.
- [58:26]
B
Repeat it then so that it's on the recording.
- [58:30]
C
Do you think that working barrels will be so nice but those barrels are.
- [58:37]
A
China.
- [58:42]
C
To the US.
- [58:50]
B
Yeah. So for the sake of those online, the question is does it matter where the barrels of oil are being sold? If they're going to China or if they're going to the US or they're going to other actors. So is there does it matter who the market is? I think is the question.
- [59:04]
C
I think by and large not because the oil market market is globally integrated. There's a global price mechanism. I mean on the margin it can make a difference. You might have to discount a little bit if the Americans are not willing to buy your oil. But we're still as far as the hydrocarbons market is concerned, we're still in a globalized age. Gas is different because that's largely traded through pipelines or through long term supply contracts of liquefied gas. But the nice thing about oil is that you, you'll almost always find a buyer unless you're under really extreme American sanctions. That's the only exception.
- [59:39]
B
I'm going to take that one more question from the back and then, Kay, I'm going to come to you for some online questions and then we'll come back to the room. So she's in the back there? Yeah. If you raise your hand, she'll bring you the microphone.
- [59:51]
H
Hi.
- [59:52]
F
Thank you.
- [59:52]
H
My name is Katrina. Thanks for a very interesting lecture. I guess my question is a bit more crystal ball and maybe a little bit off, off, off the topic. But I guess given all the recent trends happening in the world, Venezuela, Greenland, also a lot of companies and trends about hydrocarbon in general. A lot of companies committing to net zero decarbonizing trends of hydrocarbon going down in the future potentially. What's your hypothesis around the price of oil in the future? And also is it, and also the impacts on politics? Is it the end of global world order as we know it? Is it the start of World War 3, land grabs? Like what, what, who are going to be the winners and losers if you were to put your crystal ball hats on?
- [60:38]
G
Thank you.
- [60:40]
C
Yeah, that's, that's a big question. I, I think there's been a real shift in thinking about the future of hydrocarbons. Markets during the last few years accelerated under the Trump administration and there's been a lot of deployment of renewable energy, but most of it has been additional generation capacity rather than substitution of hydrocarbons. So what we seem to be heading for is a world where we consume ever more energy and most of the incremental energy is going to be renewable. But a lot of the sort of historical stock going forward will still be hydrocarbons. And currently there's this pretty heavy underinvestment by multinational oil companies. Prices are very low. The shale patch is going to suffer if prices go below $60 per barrel. And then in a few years we'll have a lot of undersupply and probably a positive price shock and you know, we'd be probably looking at triple digit prices per barrel again. That's sort of, I think, the default assumption in the market and is something that I'd also subscribe to. And at that point all this could become politically interesting again because you'll have a lot of powers with large fiscal surpluses again and with potentially authoritarian leaders that could do pretty high risk things. Whether it's populism or something else. You might have seen that the International Energy Agency has adjusted its forecast of peak oil consumption or has shifted to a more emphasized, a different scenario where there's less policy action on climate. So it could well be that peak oil demand is still, you know, two decades in the future. And that producer with very large reserves like Saudi Arabia, Kuwait, the Emirates, Iraq and also Venezuela as potentially sort of an American quasi colony, could produce more than they ever have at quite high prices.
- [62:35]
B
Kay, do you want to, where do you want to ask your questions from? Do you want to maybe come up here because you're in that middle part where we've been getting a lot of reverb or maybe just go to the podium. Many thanks to all of our listeners online for staying with us.
- [62:53]
A
Thank you. Hopefully the audio is a little bit better from here. My name is Kay and I'm from facilitating the online chat tonight. So thank you to everyone who's been submitting lots of very interesting and and many, many questions. I've picked three for you, Professor Hertog. The first comes from Poppy Joyce, who's a year 12 student at Epsom College and is hoping to study economics at lse. Her question is, in the Venezuelan case, do oil rents operate primarily as a material constraint on foreign policy or as an enabling condition for populist narrative constructions? And how could we tell this empirically?
- [63:39]
C
Yeah, that's a good question. Not only in Venezuela, but also in Ecuador and Bolivia. There's also a strong symbolic significance to the natural resources, the national sovereignty over those resources. But it's only at times when those resources really produce a lot of income that I think this becomes virulent in terms of radical foreign policy. So in that regard, I think I'm more of a materialist. At the end of the day, you need the dollars in the bank and you need the current account and fiscal inflows to enable these kind of high risk activities. But it is true that in Venezuela nowadays, obviously there's still a strong resource nationalist discourse. It's something that you have historically in many OPEC countries, but most of the time that doesn't then translate into any radical foreign policy.
- [64:25]
A
Fabulous, thank you. I hope that answers your question, Poppy. Our next question is from Ali, who's an international relations student with the Open University. This is more, I would say, European and domestic based. Ali's question is what should we expect from populist parties within the liberal order who may be elected, for example, the AfD reform or the national rally? In the absence of oil, can they afford more risky policies due to their economic position?
- [65:02]
C
It's a tricky one because the global liberal order is obviously very much in crisis and in decline. And at some point, you know, right wing populism might be sort of the, the establishment default in, in Europe. I think what we've seen, at least in recent years, is that within Europe, European institutions, leading liberal powers on the continent, they still had a relatively strong constraining effect. If you look at Meloni in Italy, for example, who is in many regards a classical populist, she's running a pretty hardcore socially conservative agenda domestically. But in terms of foreign policy and what she does in Europe, she's really playing by the book. And she's quite well liked in Brussels. I mean, to the extent that you can be as a right wing populist or in Paris or in Berlin. So how long that dam holds, I don't know. But I think for now there's still a significant constraint. I think once you have so Le Pen and Alice Weidel both in power in Germany and France at the same time, then I think all bets are off. You know, I think it's going to be a different world.
- [66:11]
A
Thank you so much. Are there's. I have two more questions from online, if we're happy to do two. Yeah. Our next question is from Fatima Slate. How can the goals of populism and foreign policy be reconciled without making major concessions that contradict the principles upon which populism is based?
- [66:34]
C
So what would. Sorry, can you.
- [66:37]
A
How can the goals of populism and foreign policy be reconciled without making major concessions that contradict the principles upon which populism is based?
- [66:50]
C
Well, I would say that as long as, I mean, to be sort of flippant, as long as you have enough money, you don't have to compromise a lot. So I think, you know, what Chavez or Correll Morales or Ahmadinejad did at sort of the heyday of both oil rents and radical foreign policy was, was quite consistent. Right. They, they didn't have to compromise a lot. They did stand up to the United States, to the global liberal order, and then they, they incurred significant cost in the process. But, you know, then once the money runs out, as it did both under Chavez already, or probably even more prominently in Ecuador under Correa's successor, you have to compromise them very, very heavily. And Lenny Moreno became sort of a closeted neoliberal because he had to roll back almost everything that Korea had done both domestically and internationally.
- [67:38]
A
Fabulous. Thank you so much. And we're going to our last question now, which is from Ethan Aylmer with OPEC's influence diminishing following US military operations. How does the weakening of the cartel's capacity affect the future viability of oil rich populist leaders?
- [67:58]
C
Yeah, there are many moving parts there. It's true that we're currently in a situation of structural surplus and it's probably going to get worse in 2026 and for now, OPEC. So OPEC plus Russia have decided to go for a market share strategy because their previous price defense strategy didn't work because their market share was too small and because shale is very reactive. If you reduce production to push up prices, prices go up for a little bit, shale produces extra, prices go down again and the only thing you have is lost market share. And I think they've belatedly come around to understanding these types of dynamics. So structurally at that point already OPEC didn't have a lot of long term pricing power. It could only shift prices in the short run a little bit. The and now you have additional fishes within OPEC where suddenly Saudi Arabia and the Emirates aren't getting along anymore. Saudi needs high prices, the Emirates don't necessarily, the Emirates want to go for a high market share strategy. There could be very, very interesting diplomatic dynamics playing out in 2026. That all being said, I think, I think if and when the oil market tightens again, and I think it's bound to tighten at some point there will be, at least in terms of short to medium term pricing power, there will be more influence in OPEC and they might be able to control the market again. It's just that right now they're sort of on the ropes.
- [69:18]
A
Fabulous. Thank you so much. That concludes our online questions and thank you so much to our online audience for submitting those and to to Professor Hertog for your insightful responses.
- [69:29]
C
Thanks Kate.
- [69:30]
B
We do still have time in the room for a few more questions. If there are more questions. I see a hand right there.
- [69:37]
A
Hi, I'm Kanchan, I'm a student at Imperial. Thank you for the talk. My question is that given the nature of these small populist oil renting countries, what has been the role of say the non western elites but rising powers like China and Russia in shaping the nature and the trends that you've observed in your research?
- [70:03]
C
So on China and Russia and the relationship to kind of the core cases, all of those countries try to strengthen their alliances with China and Russia mostly because they were not American, they were not part of the liberal international order as far as Russia itself is concerned. I think the theory also sort of works to Explain Russia itself as an actor. It's sort of, it's a borderline case because it's a great power with nukes and a large military. So it has a lot more going for it power wise than just a bit of fiscal policy autonomy because of hydrocarbons exports. But if you, if you look at sort of the, the degree of risk taking that Putin has, has undertaken over time, it also broadly correlated, at least in some years and in some regards with the degree of hydrocarbons surpluses that they generated. I, I mean, if you look at Venezuela in particular, it's been very, very dedicated to building links with Russia and China where there were very few before. But I don't think that's necessarily because of a strong ideological affinity, but it's more because that was a way to kind of thumb the nose at liberal establishment powers.
- [71:13]
B
The other thing I would add is that during the time that these populists were in office in Latin America, at least I don't know about the rest of the cases, the role of Chinese development finance was hugely important for those countries. So when Ecuador was pulling out of international agreements and defaulting on its debt, China was one of the only places that would give it any kind of finance at all. And similarly, Venezuela now owes very large sums of money to China because of the support that China historically gave Venezuela in development finance. So that I think was another piece of. I mean, they had a lot of oil revenues, but they still often needed investment from someone to develop those oil resources. And that Chinese finance in particular was hugely important. And, and they're now the customers, even despite sanctions sometimes. Yeah, I see a hand right there. You're in the dangerous middle. So. But I think let's still wait for a microphone and see if we can hear you through that. If not, we'll try it without the microphone, but let's try with first.
- [72:18]
C
Okay.
- [72:19]
D
Is this all right?
- [72:19]
B
It's pretty good. You're pretty good, actually. So go ahead.
- [72:22]
D
That's great. Yeah. I'm Ben, civil servant, and congratulations on your professorship as well.
- [72:28]
C
Just want to say.
- [72:29]
D
Yeah, so I guess, sort of building on that, could this sort of relationship with China or Russia present a sort of either an alternative causal mechanism or potentially a confounding, you know, sort of factor? For example, let's say you have a particularly rosy relationship with China. They invest in your country that allows you to start exporting all this oil. And it's not necessarily the material constraints that allow you to then attack the wet the West. It's more the fact that now you've got this relationship with China or this relationship with Russia and you're like, okay, I'm standing united with other powers that are attacking the west and that's the sort of thing that's, you know, correlated with these oil exports. So, yeah, thanks.
- [73:15]
C
Yeah. I mean, it is true that obviously also as the world becomes more multipolar, smaller states have more opportunities to play different patron powers off against each other, like Kathy just alluded to already. But I still don't think it explains very well the variation over time and the fact that the hydrocarbon strength and radical action correlate quite closely. It's, you know, I mean, once Russia and China is invested somewhere, it's hard to see why their level of support should co vary so closely with sort of fiscal and current account surpluses.
- [73:50]
B
Okay, there's a hand right there next to the orange sweater.
- [73:55]
G
Thank you. Hi, my name is Kerry and I'm a climate advisor speaking during the time of Davos. And we heard Mark Carney speak very brilliantly. And I will poorly paraphrase about the need for middle countries, as you said earlier, to come together and if we're not at the table or on the menu and to ignore ceratus paribus for a minute and to look forward. Do you think under your theory we're going to see in the Carney ideal a togetherness of such countries or do you think even in light of reschool it's really resource constraints, there's going to be this remaining convergence?
- [74:40]
C
So what's that about sort of alliance building amongst.
- [74:43]
B
Alliance building against. Against Trump and against the populism? Is that the alliance? Yeah. Okay. Sorry to do it so unsubtly.
- [74:55]
C
Yeah, I mean, it doesn't look like it right now. I think what we're seeing is so a survival of globalized institutions, especially in the economic sphere, that just carve out the United States that the United States just isn't part of. So Europeans and many other middle powers around the world, they've stepped up their negotiation of free trade agreements and bilateral investment treaties and all of this because the global institutions that the US Is part of don't function anymore. So I think on a more technocratic commercial level, we're going to see a globalized sphere ex United States. But I don't think. I think they'll do that very quietly and not framed as sort of an anti US alliance. I think the moment when powers around the world could have stood up to Trump possibly has passed. Right. I mean, the Europeans, they've fallen over themselves to know, fawn over Trump, you know, swallow the tariffs. And they're in such a difficult situation with China, the huge Chinese trade surpluses with Europe, that they can't easily ally themselves with China against the United States. So I think in terms of sort of an open anti Trump or anti Western populist coalition, I, I think it's very difficult to pull off structurally.
- [76:18]
B
I was also just going to add, you know, last week the Trump administration pulled out of 66 international treaties and institutions. And so, you know, it struck me when you were doing your presentation and you were talking about how one of the things that they do is pull out of international organizations and, you know, last time it was only the Paris Agreement and this time it's 66 already. And speaking as somebody who studies global environmental negotiations, I think actually they, they're going to go a lot better without them there would be my guess. But I think your point about they may not be overtly mobilizing against Trump, but you know, certainly as organizations, they will be moving forward without Trump.
- [77:01]
C
Yeah. The U.S. administration, smaller countries need institutions. Right. It's a guarantee of survival and minimal influence. So there's a strong incentive for institutionalization cooperation if you're small to mid size. So I think that that's going to continue unless the US Kind of actively undermines that.
- [77:20]
B
Do you want to have the last question? Oh, you also too. Okay, so you have the next, the last question. Here's the last one. We'll take them both and get an answer from you and then we'll be done.
- [77:30]
E
Okay, thanks very much. Can you hear me? Okay, well, thanks very much for the talk and congratulations on your professorship. I was just, I was interested in the comment that you made about during the Cold War, countries would have cover from, say, the, the Soviet Union, which would mean that they could take more extreme positions. Did you see a smaller effect of this with some of these countries kind of distributing some largesse, ideologically kind of aligned countries and whether that affected the positions they took so they got a load of petroleum and therefore felt a little bit more brave in taking certain positions? And did that kind of create a tale to the effect that you saw of these kind of countries with other countries kind of falling behind?
- [78:13]
B
Okay, I think you're in just the right position to take his microphone and give it to this young man. No, in front of you. There we go for the last question.
- [78:23]
G
Go ahead.
- [78:25]
B
He'll answer them both together.
- [78:26]
I
Okay. Thank you, professor, for the important session and most important time in the world. My Name is Mazen, I'm from Saudi Arabia. I'm working as a public policy analyst in Ministry of Economy and Planning. I come all, I came all the way from Saudi Arabia to attend this session. So my question is why are we are talking about oil rich populist states and what about the GCC countries as oil rich states and how have they made managed to endure while many other oil rich countries collapse in that time? I think my question is directly linked to this session but I'm waiting for the answer in this question. Thank you.
- [79:06]
C
Thanks. Reverb? Yeah, I think so. I caught some of both but neither completely.
- [79:13]
B
Well, it's the end so why don't you answer what you can and then we'll go.
- [79:17]
C
Yeah, we'll just peter out here. So on the by, I mean if the question was sort of about the changing great power context and the end of the unilateral era when yes were the only hegemon, I think it's true that the ability to act with more autonomy is the most consequential. If you're in sort of a uni, in a unilateral environment. Right. Then it makes the biggest difference. Difference. Whereas if you have a bipolar multipolar order, then most countries have a little bit of autonomy because they can pick among patrons, you know, they can move back and forth. They can do, you know what Egypt did In the early 70s, they, you know, ditched the Soviets, switched to the Americans. So it's that kind of more fragmented or more polarized order. Middle powers or small powers have a bit more autonomy anyway. But I guess even within that kind of context with rents, you still have, you have more autonomy and perhaps you don't need any patron at all in some sense. I'm not sure whether that was the question. Okay, so on Saudi Arabia I can just because of the acoustic, I can just ad lib. But it's a country that because of its very large rent revenue and because of its large historic surpluses, in principle it's very high autonomy. Right. But I think you have to go back to domestic policy and the type of leadership and the origin of the regime to understand foreign policy. And in a sense for a long time Saudi Arabia didn't, didn't act on the autonomy and the resources that it had because it was very conservative and a status quo power. And there were other players in the region, like for example, like the United Arab Emirates that did much higher risk things, things across the region in terms of getting involved in all sorts of proxy conflicts and doing things in Sudan and Libya and the Horn of Africa. So I think that comes back to the idea that oil rents are an enabling factor, but they don't tell you what the leadership is going to do with the rents. I mean, historically Saudi Arabia has very much decided to commercially and in terms of security range, integrate itself with the West. Right. It's a very status quo oriented, pro dollar sphere, pro American player, but with a different leadership, it could have done something very, very different.
- [81:34]
B
Well, it's been a great pleasure for me and I think all of you here to listen to Professor Hertog. Thanks to our audience for being here and joining us today. Thank you to Professor Hertog for such an interesting presentation on such an important topic. You can follow the Department of Government for all the latest updates on Instagram and on xsc government, on bluesky, scgovernment, bluesky social and on LinkedIn. Keep an eye out for more public events and thank you very much.
- [82:01]
C
Thanks everyone.
- [82:08]
A
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