In 2016, Prince Mohammed bin Salman announced, “We have developed a case of oil addiction in Saudi Arabia.” This was an understatement; the modern state was created solely by oil, its economy financed by oil. Prince Mohammed’s announcement came after oil prices dropped in 2014, resulting in a Saudi deficit of almost US$100 billion the following year. Oil accounted for 90 percent of the country’s exports and 45 percent of its GDP.
The prince’s “Vision 2030” plan was an ambitious remaking of both Saudi society and its economy; women would enter the workforce, a tourism industry would be developed, the government would become more secular, billions would be invested in renewable energy, and a new $500 billion smart city—Neom—was planned.
The Saudi addiction to oil was glorious while it lasted. In 1973, the country had a population of seven million, a tiny kingdom half a world away from North America, yet it exerted enormous power. It was the leading proponent of the oil embargo that year, whose reverberations echoed around the world and are still being felt, evidence of oil’s global sway. In the US, the lengthy lineups for gas were a staple of the evening news. The automobile still held an element of romance in the 1970s, still represented a particular kind of freedom that was now being curtailed, the world’s most powerful nation held hostage by a tiny desert tribe.
With oil came power, and addictions can be difficult to kick.In 2022, OPEC, led by Saudi Arabia, sharply cut oil production, driving up gasoline prices weeks before midterm elections in the US. President Joe Biden was outraged and threatened to ban weapon sales to Saudi Arabia, and discussed initiating a lawsuit against OPEC for collusion. In response, the Saudis threatened to dump US debt (it holds $119 billion), which would upset financial markets.
Upon taking office in 2021 Biden had promised to make Saudi Arabia “a pariah” for its human rights record, which included the dismembering of Saudi journalist Jamal Khashoggi two years earlier. Months later, Biden was in Saudi Arabia fist-bumping Mohammed bin Salman, the friendship renewed. For fifty years, the US-Saudi relationship has been like that of an old married couple who fundamentally loathe one another but can’t afford to divorce. Despite now being the world’s largest exporter of oil, the US still imports almost 500,000 barrels a day from Saudi Arabia, part of the complex financial and refining network that dictates global oil shipments.
Saudi reserves have an estimated lifespan of sixty years, so there is a race in Saudi Arabia to diversify. Oil still accounts for 80 percent of Saudi exports and 40 percent of its GDP, making it the third most oil-reliant country in the world, behind Kuwait and Libya. But it is aggressively building solar and wind capacity, with the aim of getting 50 percent of its electricity from renewables by 2030. Fellow OPEC members Qatar, Bahrain, and the United Arab Emirates are also embarking on mammoth diversification schemes (UAE Vision 2021, Abu Dhabi 2030), expanding tourism, investing in international education and renewable resources, as well as poaching soccer stars and marquee golfers and securing a scandal-plagued World Cup in Dubai.
Saudi Arabia is the elite embodiment of what has been termed “the resource curse,” defined as “a paradoxical situation in which a country underperforms economically, despite being home to valuable natural resources.” It can be the result of putting too much labour and capital into one resource that is vulnerable to price fluctuations, leaving a country economically exposed. It can also be the result of authoritarian rulers keeping the new-found wealth for themselves while the country’s citizens live in poverty.
Oil has been a boon to Saudi Arabia, but it has created the inequality that is the hallmark of the resource curse. The Saudi royal family is the richest on earth, with $1.4 trillion in assets, while 20 percent of the country lives in poverty. Now it is moving away from a feudal model where everything is funded by oil, introducing taxation while at the same time providing less social infrastructure.
With oil came power, and addictions can be difficult to kick. But despite their outsized power, the Saudis were entirely dependent on foreign revenue in a single market. With Vision 2030, they will have less power but more freedom. Other countries defined by the resource curse aren’t as lucky.
The poster child for the resource curse is Equatorial Guinea, a tiny country of 1.7 million people spread over 28,000 square kilometers on the west coast of Africa, wedged between Cameroon and Gabon. It was a Spanish colony until 1968, when Spain, still under the control of dictator Francisco Franco, handed the country over to Francisco Macías Nguema, who declared himself “The Sole Miracle of Equatorial Guinea.” One of his first miracles was to murder or exile a third of the population. As Peter Maass reports in his book Crude World: The Violent Twilight of Oil, some were crucified, others rounded up in a soccer stadium and shot while a military band played the Mary Hopkin song “Those Were the Days.”
Macías’s nephew, Teodoro Obiang Nguema Mbasogo, was head of security, and in 1979 he staged a coup, deposing his psychotic uncle. Macías’s trial was held in a movie theatre in Malabo with the accused suspended in a cage hung from the ceiling. He was found guilty and executed by a firing squad, leaving Obiang as the new ruler.
In 1995, oil was discovered in the Gulf of Guinea, an estimated 35 billion barrels, and Equatorial Guinea quickly became the third-largest sub-Saharan oil country, after Nigeria and Angola. Yet the country saw few benefits. The amount that foreign oil companies pay countries depends in part on how sophisticated and/or corrupt the country’s leadership is. Oil companies pay a fee for the right to explore for oil, then royalties are paid on any oil that is discovered and taken out of the ground. Equatorial Guinea received relatively little on both counts because, according to the International Monetary Fund, Obiang either didn’t understand how much he was giving up or didn’t care.
One of the reasons he wouldn’t care is that the money wasn’t being paid to his country but to him directly. So the millions on offer were sufficient. Oil royalties were deposited into accounts in Obiang’s name in the Riggs Bank in Washington, DC, finally reaching a total of $700 million. A Riggs employee went to the Equatorial Guinea embassy on two occasions and picked up suitcases that contained $3 million in hundred-dollar bills to deposit. Eventually, this came to the attention of US Senate investigators, who released a report in 2004 titled “Money Laundering and Foreign Corruption: Enforcement and Effectiveness of the Patriot Act, Case Study Involving Riggs Bank.” Essentially, oil companies and an American bank were helping Obiang steal his country’s money. The Senate investigation stated that “oil companies operating in Equatorial Guinea may have contributed to corrupt practices in that country by making substantial payments to, or entering into business ventures with, individual E.G. officials, their family members, or entities they control, with minimal public disclosure of their actions.”
The reason there was minimal public disclosure was that neither the US nor Equatorial Guinea had laws requiring it. American oil companies paid more than $4 million for tuition so students from Equatorial Guinea could study abroad, though it turned out that these students were “children or relatives of wealthy or powerful E.G. officials,” according to the Senate report. The country’s own education system was among the worst in the world; 42 percent of children didn’t go to school, and only 25 percent got as far as middle school.
Despite oil companies spending billions to build offshore drilling platforms and a refinery for liquid natural gas, very little of that money entered the local economy. Construction materials were brought in, and almost all the workers—in the plant, on the oil rigs—were foreign, mostly from India and the Philippines. Chinese oil companies brought in Chinese laborers and managers. They lived in imported prefab trailers and ate imported food.
By 2017, Obiang was the longest-serving president in the world, and one of the richest men in Africa. He owned a twenty-seven-meter yacht and a Boeing 737 with gold-plated bathroom fixtures. A Human Rights Watch report titled “Manna from Heaven?: How Health and Education Pay the Price for Self-Dealing in Equatorial Guinea” noted that the country’s health and education systems were chronically underfunded and Equatorial Guinea was in violation of its human rights obligations. “Ordinary people have paid the price for the ruling elite’s corruption,” one of the paper’s authors said. And by this time, its oil reserves were dwindling. The flow of capital was diminishing and would soon end.
Between 2000 and 2013, Equatorial Guinea took in roughly US$45 billion in oil revenues. Yet it is, according to the Gini Coefficient, which measures income and wealth inequality, the single most unequal country on earth. In 2019, it had the highest GDP per capita in Africa (US$36,270) and a poverty rate of 77 percent. Half the population didn’t have access to safe drinking water, vaccination rates had declined, and health care was primitive and sporadic. The president’s eldest son, Teodorín, managed to make $300 million as minister of agriculture, more than the combined budgets for health and education. The US brought a corruption case against him, and Teodorín had to forfeit $30 million in US assets, with $25.6 million returned to the country in the form of COVID-19 vaccines that went out to 600,000 citizens. The French government convicted him of embezzlement, guilty of transferring €110 million from the public treasury into his account, most of which went toward a €175 million shopping spree on a mansion, cars, and designer goods. The French government confiscated €150 million worth of his assets. Switzerland’s investigation resulted in the seizure of eleven luxury cars and a €100 million yacht. The cars and yacht were sold and proceeds went directly to a social program in Equatorial Guinea. What social programs exist in Equatorial Guinea have largely been mandated by foreign powers. As punishment for these transgressions, Teodorín was made vice-president of Equatorial Guinea.
A lot of the oil money was invested in large infrastructure projects. There are new roads, sports stadiums, and a palace that occupies twelve square blocks. There is a new airport, five-star hotels, championship golf courses, and a new city being carved out of the rainforest. Very few locals were involved at any level in these projects. Because of the abysmal education system, there isn’t the expertise for technical and management jobs, but even the manual labour was imported. The government owns the employment agencies, and prospective workers need to belong to Obiang’s political party, and in some cases tithe some of their earnings to the government, in order to get a job. The various money laundering investigations that the US, France, and Switzerland conducted revealed that senior government officials make millions on contracts given to companies they own. Obiang and his family own stakes in the country’s largest construction firms. There is no bidding process for projects.
American oil and gas companies that bribe officials or contribute to a foreign country’s corruption don’t face any real consequences. In 2017, President Trump struck down an anticorruption rule that would require US oil and gas companies to disclose how much they pay foreign governments. The rule was designed specifically to combat the resource curse, to prevent autocratic leaders from taking payments for themselves rather than the national treasury, though in the case of Equatorial Guinea there was little difference between the two. American oil companies argued that the rule would put them at a disadvantage; other foreign companies weren’t compelled to disclose payments. This wasn’t true; both Canadian and European firms have to disclose that information. In 2016, Exxon, then led by Rex Tillerson, who was now secretary of state, was being investigated by Nigeria’s economic and financial crimes commission regarding oil rights secured by Exxon in 2009, despite a bid that was $2.25 billion lower than a Chinese competitor’s. Nigeria routinely makes the list of most corrupt countries on earth, a country that knows corruption when it sees it.
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Equatorial Guinea had little in the way of environmental regulations. As a result, spills on offshore rigs were common, but, because the country is off the international radar, they went largely unreported. In 2021, French researchers studied ten years of images from the Envisat satellite and concluded there had been 18,063 oil slicks in the Gulf of Guinea between 2002 and 2012. Some of these were natural seepages from oil near the surface, but the vast majority were the result of shipping or production spills. The volume of oil was greater than the Deepwater Horizon spill, which leaked 4.9 million barrels into the Gulf of Mexico in 2010. In 2008, oil spills covered almost a thousand square kilometers in the Gulf of Guinea.
In the end, we are all cursed, cursed by oil’s ease, seduced by its possibilities. It gave us freedom, warmth, hope, and ruin.In 2022, ExxonMobil, one of the major companies in Equatorial Guinea, announced it would leave the country when its license expires in 2026. Its output peaked in 2014, when it was pumping 300,000 bpd. By 2022, it was down to 15,000 bpd. Total production for the country was down to 95,000 bpd, its reserves projected to run out in 2035; with the quiet exit of major oil companies, revenue will fall steeply long before that.
There will likely be little demand for the golf courses and five-star hotels. When the party ends, there will be less rainforest, more environmental degradation, and the mocking reminder of abandoned drilling platforms. The economy could be gutted. In 1968, the year of its independence, cacao exports accounted for 75 percent of GDP, but only 8 percent of the country’s land is now used for agriculture. Fishing was decimated by serial oil spills. This is one of the hallmarks of the resource curse: The society concentrates on a single resource and other industries wither. When the resource is exhausted, there is little to replace it. In a decade, Obiang’s infrastructure, the monuments he built to himself, may resemble those stone heads on Easter Island.
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To the north, Nigeria sits as the former poster child for the resource curse. Foreign oil companies are leaving Nigeria as well. Exxon, Shell, Chevron, Norway’s Equinor, and Italy’s Eni have retreated, selling their assets to local companies, due in part to high levels of oil theft. According to the Nigerian National Petroleum Corporation, they were losing 437,000 bpd. This is almost half Nigeria’s production, which is roughly a million bpd, down from 2.5 million in 2011. Pipelines are blown up, fires started, tanker ships filled with oil set on fire. The United Nations reported that cleaning up the Niger Delta alone would take thirty years and more than $12 billion, which might be an optimistic figure. Nigeria has US$87 billion in debt, and 40 percent of its 235 million citizens live below the national poverty line. Oil accounts for 90 percent of its exports.
At the close of COP28, Nigeria’s environment minister, Ishaq Salako, said, “Asking Nigeria, or indeed, asking Africa, to phase out fossil fuels is like asking us to stop breathing without life support. It is not acceptable, and it is not possible.”
It is instructive that this was coming from the environment minister. Certainly, any shift away from oil will present challenges, though there was nothing legally binding in the COP28 resolution to phase out fossil fuels. But Salako’s declaration was disingenuous. Eighty-five percent of Nigeria’s oil wealth went to 1 percent of the population. Before oil was discovered, Nigeria had a robust and diversified economy. Currently, 56 percent of Nigerians—133 million of its 235 million citizens—live on less than two dollars per day and are defined as “multi dimensionally poor,” meaning they lack access to clean water and sanitation, health care, clean energy, and housing. Oil curtailed Nigeria’s nascent democracy, killed critical parts of its economy, and promoted inequality. Pivoting from oil may ultimately benefit its citizens.
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An OECD paper on the resource curse analyzed twenty-four oil exporting countries (including Canada) and found “a 10-percentage point increase in the oil export share is associated with a 7% lower GDP per capita in the long run.” The long run is the issue here; will there be one, and how long will it be? In the end, we are all cursed, cursed by oil’s ease, seduced by its possibilities. It gave us freedom, warmth, hope, and ruin.
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From On Oil by Don Gillmor. Copyright © Don Gillmor, 2025. Reprinted with permission from Biblioasis.
