Big Oil Question

By Pat Host / March 5, 2010 at 5:00 AM

Rising oil prices are often assessed for their ability to allow certain countries to increase economic development, but a professor at the Army War College has tackled a different question: Do oil exports fuel defense spending?

That's the title of a new monograph written by Clayton Chun and published by the War College's Strategic Studies Institute. Chun notes that countries that are able to process, export and ultimately control vital raw materials, such as oil, can wield their financial resources to improve the well-being of their citizens -- or to threaten a region through the development of a large military or security capability.

As economies shrink and oil revenues fall, logic suggests that defense spending should shrink. But Chun says this isn't necessarily the case.

Despite periods of falling oil revenues, these countries typically did not lower defense spending. In some cases, defense spending increased sharply, or the rate of decrease was much lower than the drop in oil revenues. This condition creates challenges for national security professionals. If nations face falling oil revenues and still have the will and ability to expand their military or security capabilities, then they might do so through the sacrifice of domestic spending or regional stability. Economic sanctions, worldwide recession, or falling oil demand may not stop these oil-exporting nations from purchasing weapons and creating large security forces.