29. It is also noteworthy that 15 of the 16 conflicts broke out in regions traditionally populated by ethnic or religious minorities.<sup>15</sup> This is consistent with the idea that oil wealth is only likely to encourage secessionist rebellions when it is found in regions with pre-existing ethnic or religious grievances.

30. The second mechanism that ties oil wealth to violent conflict is looting: petroleum facilities, with their high sunk costs and sometimes-remote locations, are ideal targets for looting and extortion by criminal gangs or political movements intent on raising money. One innovative study of 900 Colombian municipalities between 1988 and 2005, by Oeindrila Dube and Juan Vargas (2009), found that oil-producing municipalities were more frequently subject to paramilitary violence, especially when oil prices rose. During the civil violence in Iraq between 2004 and about 2007, opposition forces appeared to raise large sums from black market oil. According to one estimate, in 2006 insurgents earned between $25 million and $100 million from oil smuggling and related activities.<sup>16</sup> 31. Both of these mechanisms are consistent with a bounty of new research that finds a strong correlation within countries between the location of oil wealth and the location of armed conflict: when oil and gas are found in a conflict zone, conflicts are more likely to flare up, especially if the region is relatively poor<sup>17</sup> ; casualties tend to be higher<sup>18</sup> ; and the fighting tends to last longer.<sup>19</sup> 32. A third possible mechanism – for which evidence is admittedly more fragile – is that civil conflicts can be triggered by macroeconomic shocks; since oil prices are unusually volatile, this would help account for their higher conflict risk.<sup>20</sup> The most convincing study of conflict and economic shocks is Miguel, Satyanath, and Sergenti (2004), which used variations in rainfall to identify the relationship between economic growth and conflict in 41 African states between 1981 and 1999: it suggested a five percentage point drop in GDP was associated with a 50 percent rise in the likelihood of conflict the following year. Still, extrapolating these findings to other settings may be hazardous (Blattman and Miguel 2008).

33. One hint of a possible link between oil shocks and violent conflict in the Middle East comes from comparing the region‘s conflict trend with trends in oil prices (Figure 7). The subsequent section will show that MENA‘s conflict trend closely mirrored the global trend, except for the regional jump in violence from 1978 to about 1984. This period also coincided with a pair of large price shocks – one positive (1978-79), the other negative (1979-1985).

> 15 The only exception was the 1994 civil war in Yemen, when the Yemen Socialist Party fought to re-establish independence for South Yemen, which had become part of the unified Republic of Yemen in 1990.  The territory claimed by the separatists included recently-discovered petroleum reserves in the Hadramout region.

> 16 John F. Burns and Kirk Semple, ―US Finds Iraq Insurgency Has Funds to Sustain Itself,‖ _New York Times,_ November 26, 2006.

> 17 Dube and Vargas (2009); Østby, Nordås, and Rød (2009).

> 18 Lujala (2009).

> 19 Buhaug, Gates, and Lujala (2010); Lujala (2010).

> 20 Humphreys (2005) finds evidence to support this mechanism; Ross  (2006; 2012) does not.

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