The New Oil Wars: The Predatory Political Economy of Palm Oil Production

• In Event: Criminal Politics: Political and Criminal Violence

Abstract

The production of illicit crops such as cocaine and heroin from coca and poppy plantations is famously associated with an increased risk of violence, but the relationship between violence and legal bulk commodities like palm oil has been largely neglected by political science. This paper theorizes that the production technology of palm oil encourages violence by generating a predatory political economy. Palm oil’s relatively capital-intensive nature, its labor organization requirements, and the oil palm lifecycle provide opportunities for multiple actors to engage in criminal and collusive practices aimed at capturing rents generated by the industry. In addition, unlike mineral oil, the production technology of palm oil generates limited incentives for the state to monopolize violence in a territory. This paper uses newly available panel data on the expansion of Indonesian palm oil plantation coverage from 2005 to 2014 derived from satellite imagery along with survey data aggregated to the subdistrict level to show that plantation expansion generates an increased risk of violence. Using a difference-in-difference empirical strategy to control for subdistrict heterogeneity and variation over time, we find that plantation expansion increases the likelihood of violence. Results are robust to the instrumentation of palm oil expansion with estimates of the ecological suitability of a subdistrict to palm oil production. To understand the causal mechanisms work, we conducted follow up qualitative fieldwork in several locations, interviewing members of local communities, plantation staff, police and government officials. We found three main patterns of violence, all intimately tied to the predatory political economy of palm oil: conflict over land use, inter-ethnic violence, and criminal or mafia violence. By far the most significant is the last. This paper generates and tests novel theoretical expectations with respect to the violence associated with palm oil expansion that has important implications for political economy and comparative politics.

Authors

• Paul D. Kenny, ANU

• Edward Aspinall, Australian National University