Podcast Summary: How Oil Rents Fuel Populist Foreign Policy

Podcast: LSE: Public lectures and events
Date: January 21, 2026
Host: Professor Kathryn Hostetler, LSE
Speaker: Professor Steffen Hertog, LSE Department of Government

Overview: Main Theme & Purpose

This lecture, delivered by Professor Steffen Hertog as part of LSE's inaugural professorial series, explores how natural resource rents—especially from oil and gas—empower populist leaders in small and mid-sized countries to pursue more radical, anti-Western foreign policies. Drawing from both qualitative case studies and quantitative data, Hertog argues that it is not populism alone, but its interplay with natural resource wealth, that enables leaders to challenge liberal international norms, withdraw from global institutions, and absorb the economic costs of such behavior. He illustrates his theory using cases from Bolivia, Ecuador, Iran, and Venezuela and connects these insights to the broader decline of the liberal international order.

Key Discussion Points & Insights

1. Project Origins and Motivation

• Hertog’s project traces back to observations in the early-mid 2010s: a cohort of radical leaders from oil-rich, non-Western countries (Chavez, Ahmadinejad, Gaddafi, etc.) openly challenged Western powers and liberal international norms (04:06–06:05).
• The central question: What enables some populist leaders to act radically on the international stage, while others do not?

2. Theoretical Foundations

Oil Rents and Foreign Policy Autonomy

• Oil-rich states can afford to act independently of international economic pressures. They are less dependent on FDI or foreign markets, as oil is globally traded and generates large fiscal surpluses (06:05–12:00).
• Historical and theoretical perspectives:
  • "If you have oil, you can do all sorts of things you couldn't do without" (10:30).
  • Oil rents buy autonomy from both domestic and international economic constraints.

Populism and its Foreign Policy Implications

• Core definition: highly personalized, anti-elite political movements centered on an outsider leader (14:30).
• Populists mobilize "the people" against both domestic and international elites.
• They tend to reject established institutions (both in their country and internationally, e.g., IMF, World Bank, EU), casting these as elite tools suppressing popular will.
• “You can project anti-elite attitudes of populists onto foreign policy, assimilating domestic elites with international ones” (19:38).

Combined Framework

• The key: Populist leaders only pursue radical, high-risk foreign policies when resource rents—“hydrocarbon strengths”—enable them to absorb the costs (e.g., sanctions, lost investment) (21:00).
• Three main hypotheses:
  1. Oil rents enable populists to take antagonistic positions toward Western powers.
  2. Oil rents enable withdrawal from international institutions.
  3. These effects are stronger for oil-rich populists than for those without oil.

3. Case Studies (Ecuador, Venezuela, Iran, Bolivia)

• All four are widely identified as populist regimes; their leaders escalated anti-Western rhetoric and policy during oil booms (24:00–28:00).
• Noted measures: offering asylum to Western dissenters, expelling diplomats, nationalizing foreign assets, withdrawing from global organizations.
• The radicalism coincided with high oil rents; when oil prices/economic surpluses fell, leaders moderated or reversed course.
• Example: Ecuador under Correa was most radical at peak oil rents; successor Moreno reversed policies during fiscal crisis (28:00).
• Other “proto-populist” Latin American leaders (e.g., Lula in Brazil) moderated due to lack of rents.

4. Quantitative Evidence

• Statistical models using global data (1990–2015): the interaction of populism and oil rents predicts greater anti-Western voting in the UN, increased sovereignty rhetoric, withdrawal from international institutions, and reduced treaty participation (30:00–40:00).

• “If you’re a populist without oil, your rhetoric … is like everyone else’s. If you have oil, you talk about that sort of stuff quite a lot, and the effects are substantial.” — Steffen Hertog (36:30)

• Rents alone (without populism) do NOT drive radical foreign policy; it’s the combination that matters.

5. Robustness, Extensions, and Limits

• Results are robust to alternative country samples, resource measures, and timeframes.
• Populist oil exporters are more likely to be sanctioned, but usually withstand “regular” sanctions unless oil sales are explicitly blocked (38:00).
• The logic does not apply well to great powers (like the US or China) whose scale insulates them regardless of oil.

Notable Quotes & Memorable Moments

• On the underlying mechanism:
  “If you have oil, you can do all sorts of things that you couldn’t do without. You have more autonomy … You don’t need to tax people or businesses domestically, which makes you relatively more independent from your domestic economic base.” — Steffen Hertog (10:00)

• Populism’s international extension:
  “It’s very easy to project the anti-elite attitudes of populists onto foreign policy and assimilate domestic elites … with IMF elites, financial elites, World Bank elites, UN elites.” — Steffen Hertog (19:38)

• Statistical findings:
  “If you’re populist without oil, no effect. Over here, populist with oil, quite a strong effect.” — Steffen Hertog, explaining margins plots (36:00)

• On case dynamics:
  “Chavez had a big regional project … but when they ran out of money, all of that stopped. At the end, [Venezuela] was just a failed rogue state – not unlike Cuba, just with less state capacity.” — Steffen Hertog (43:11)

Important Q&A Segments (Timestamps & Highlights)

• Venezuela’s trajectory:

  • [42:44–44:45] — Q: Will Venezuela try to negotiate from a position of strength?
  • A: “Venezuela is now more like North Korea or Cuba … they really lost their ideological project. When they ran out of money, all that kind of stopped.”

• Oil “rent” terminology:

  • [46:05] Q: Why “oil rent,” and what does it really mean?
  • A: It’s not about reserves or production alone; surplus revenue is key. Only surpluses grant autonomy; if you run deficits, you’re again dependent.

• Does the theory apply to other resources (iron, copper, etc.)?

  • [48:08] A: Similar effects seen for minerals, but hydrocarbon rents are uniquely large, so effects are much smaller for metals or diamonds.

• Trump’s US and applicability of the theory:

  • [49:48–51:15] A: Theory is best for small/midsize states. For large powers like the US, autonomy comes from scale, not oil rents per se. “At that scale, there are different forces at play.”

• Sanctions regime & effectiveness:

  • [52:20–53:30] A: Populist oil states can survive “regular” sanctions, but when oil exports themselves are blocked (e.g., Iran), sanctions can become much more effective.

• Democratic vs. revolutionary-origin populists:

  • [53:37–56:56] A: Resource rents allow both to pay off supporters, dismantle institutions, and rewrite constitutions. “Gaddafi abolished the state … No one could afford such an experiment without oil money.”

• Does oil buyer matter (e.g., China vs. US)?

  • [57:28–59:04] A: “Oil market is globally integrated. … You’ll almost always find a buyer unless you’re under extreme American sanctions.”

• Crystal ball: future of oil, energy, world order:

  • [60:37–62:34] A: Underinvestment in oil, rising demand may mean another price spike ahead, reviving the pattern of oil-fueled foreign policy autonomy.

• Material vs. symbolic value of oil rents (Venezuela):

  • [63:39] A: “Symbolic significance … but only when resources produce a lot income does radical policy become virulent. At the end of the day, you need dollars in the bank.”

• Implications for European right-wing populists:

  • [65:01] A: Still constrained by institutions—“If you look at Meloni in Italy … hardcore domestic agenda, but in Europe she’s playing by the book.”

• GCC states & durable oil exporters:

  • [78:24–81:33] A: GCC stability/non-confrontational policy reflects leadership choice: “Oil rents are an enabling factor, but they don’t tell you what leadership will do. … With different leadership, Saudi Arabia could have done something very different.”

• Role of China & Russia as patrons:

  • [70:03–73:50] A: China and Russia provided alternative finance/alliances to isolated populist regimes (e.g., Venezuela, Ecuador). Hertog sees hydrocarbons surpluses still as the main trigger for radical policy shifts.

Final Takeaways & Open Questions

• Oil rents empower populist leaders—but only when paired with the drive to break international norms.
• The wave of anti-liberal, resource-fueled challenges has ebbed with lower oil prices and shifts in global power (e.g., Trump as a disruptor).
• If/when new commodity booms arrive, similar dynamics may re-emerge—though the cast of populist characters could change.
• There is interplay between resource-fueled autonomy, leadership intent, and systemic context (e.g., multipolarity, sanctions, alternative patrons).
• Surplus oil revenues grant “degrees of freedom” in policy; but decisions about confrontation, accommodation, or stability remain political.

Closing words:
“I don’t think the story is quite over yet … if you get high oil prices again, there will be big surplus countries able to do risky things. What will happen next? Perhaps it won’t be the same type of populism.” — Steffen Hertog (39:30)

For full context, case study detail, and statistical robustness, Hertog invites listeners to request the full paper by email.

[End of Summary]