ARENA Working Papers
WP 99/12



What Do Theories of International Regimes Contribute to the Explanation of Cooperation (and Failure of Cooperation) among Oil-Producing Countries?*

Dag Harald Claes**
ARENA, University of Oslo


The title of this paper is rather optimistic about the relevance of regime theory, the question is not do theories of international regimes contribute, but what do theories of international regimes contribute. Let me immediately warn the reader, that my conclusion will be rather pessimistic. Let me also make it clear that the paper consists of empirical arguments, and is thus not a theoretical exposition. The title could thus be rephrased as `to what extent do theories of international regimes emphasize factors that are relevant and powerful in the explanation of oil producer cooperation'.

The paper is organized as follows, first, it is necessary to define international regimes and the different types of theories of international regimes. Secondly, I will briefly describe the empirical phenomenon `cooperation among oil producers'. The third part of the paper, and this is the main part, is an application of a few selected theories of international regimes, on the case: `cooperation among oil producers'. Finally, since the evaluation of the explanatory power of theories is a relative matter, I will present alternative, and to my mind more important, explanations of oil producer cooperation.

Defining International Regimes

The classic, and now referred to as the consensus definition of international regimes, was put forth by Stephen Krasner in a special issue of the journal International Organization in 1982. Here:

?International regimes are defined as principles, norms, rules, and decision-making procedures around which actor expectations converge in a given issue-area? (Krasner 1982:186). ?Principles are beliefs of fact, causation, rectitude. Norms are standards of behavior defined in terms of rights and obligations. Rules are specific prescriptions or postscriptions for action. Decision-making procedures are prevailing practices for making and implementing collective choice? (Krasner 1982:186).

Several authors have tried to modify and clarify this definition, giving different interpretations and meanings to the concept international regimes. For the purpose of this paper, two aspects of the concept have to be clarified. First, international regimes is a sub-group of international institutions, of which international organizations is another more formalized and bureaucratic sub-class. If one starts from the regime tradition, one would say that regimes can be accompanied by organizations; if one starts from the international organization tradition on would tend to say that organizations can include regimes. Such statements need not have different empirical implications.

The second aspect of the concept of regimes that I will mention, is its underlying normative core. Levy, Young and Z�rn (1995:271) expresses this when they write: ?Given the basic thrust of regime analysis as a tool for understanding international cooperation and the role of norms in the pursuit of cooperation there is a need to go beyond merely routinized or patterned behavior. The principal claim of regime analysis is that states may generate institutions in identifiable issue areas that affect their behavior and foster cooperation, even if short-term interests would dictate deviation?. If the observed cooperation is explained by patterns of complementary interests and underlying distribution of power, regimes have no effect and thus, in such cases, theories of international regimes does not contribute to the explanation of cooperation. As I will argue later, oil producer cooperation is such a case.

Theories of International Regimes

In order to define theories of international regimes, it seems appropriate to consult a recently published book called: ?Theories of International Regimes? (Hasenclever et al. 1997). In this book Hasenclever, Mayer and Rittberger divide the theories of international regimes into three schools, power-based, interest-based and knowledge-based theories.

Power-based theories of international regimes can be described as `realist theories of cooperation'. Not only conflict but also cooperation is explained by power and the distribution of capabilities among states.

The interest-based theories are the mainstream of regime theories. It ?emphasize the role of international regimes in helping states to realize common interests? (Hasenclever et al. 1997:4). The focus is on situations where the constellation of actors' interests is so that they can only achieve beneficial outcomes through institutionalized cooperation.

The knowledge-based theories stress ideas and knowledge as explanatory variables. The focus is partly on how ?causal and normative beliefs form perceptions of international problems and thus demand for regimes? (Hasenclever et al. 1997:137).

There is also a difference in the literature whether the research is focused on explaining the existence of regimes, or on the effects of regimes. The emphasize of the regime literature has moved from the first to the latter question. The empirical discussion in this paper will primarily be related to the effects of regimes. It then seems important to distinguish how the regime improve conditions for cooperation and the ?degree to which a regime ameliorates the problem that prompted its creation?, to use a phrase by Levy, Young and Z�rn (1995:291). In the case of oil producer cooperation this would be the difference between how the rules make oil producers cooperate and the extent to which this rule-based cooperation leads to a higher oil price than what would otherwise have been the case.

Let me briefly clarify the relationship between the definition of international regimes and the theories of international regimes. If we relate the substantive definition of regimes as norm-based convergence of expectations that leads to the production of explicit rules (Stokke 1997:27), the scope of theories of international regimes as described above obviously encompass more than this. Similarly, all theories explaining the existence, persistence and effects of substantive regimes cannot possibly be counted as theories of international regimes. There are obviously other explanations for the existence, persistence and effects of international institutions than what we reasonably would include in the category `theories of international regimes'. An example might illustrate this point. The General Agreement on Trade and Tariff is often referred to as a prominent example of an international regime (Levy, Young & Z�rn 1995:279). I guess not even the boldest advocate of regime theory would include David Ricardo's theory of comparative advantage as a part of the theories of international regimes, although the mechanism specified by the theory, in itself, both can make states change their behavior and start bilateral trade relations (hardly a regime), but also make them change behavior and agree on common rules for free-trade (as the case of GATT).

Helen Milner argues that ?even strong proponents of the [regime] concept admit the difficulty in defining it? (1993:493), and that the term `regime' has lost its earlier charm. Some scholars have thus retracted to the language of institutions, or institutionalism (Milner 1993, Keohane 1989), others use concepts, like `policy coordination' (Haas 1992), or `governance system' (Young 1994). But as Hasenclever, Mayer and Rittberger state ?the substantive questions that define the regime-analytical research agenda ? whether couched in terms of `regimes,' `institutions' or otherwise ? still count among the major foci of International Relations scholarship in both Europe and North America (Hasenclever et al. 1997:1).

What Is Cooperation among Oil-Producers?

Let me now devote the attention to the substantive question of this paper: the cooperation among oil producing countries. First of all we need to address the question: How do we know that there is such a thing as cooperation among oil producing countries?

Well, the mere fact that the Organization of Petroleum Exporting Countries (opec) by 1999 has held more than one hundred conferences indicate that this is a case of institutional international cooperation. In addition there are several sub-committees and substantial informal diplomatic interaction among the oil ministers. The contents of the agreements made at the conferences can be characterized as joint decision-making on a subset of what would otherwise have been part of sovereign industrial, economic and to some extent foreign policies of the member states. However, the cooperation among oil producers also can be understood as a form of market behavior.

Cooperation among producers of any commodity, usually aims at creating a higher price than would otherwise have been the case. In other words to rise the price above the competitive market price. We obviously, cannot conclude from an observation of increasing prices that producers cooperate. Several other factors can lead to increased prices. In the economic literature on the oil market the most persistent alternative explanation to that of cooperation is that the oil price increases due to a worldwide extraction of a fixed geological reserve of oil. Morris Adelman argues fiercely against this explanation, when he states:

The total mineral in the earth is an irrelevant non-binding constraint. If expected finding-development costs exceed the expected net revenues, investment dries up, and the industry disappears. Whatever is left in the ground is unknown, probably unknowable, but surely unimportant: a geological fact of no economic interest. (Adelman 1993a: 220)

This quote also indicates the basis for calculating the price that would prevail had it not been for producer cooperation. This basis is the costs of finding and developing new oil resources. At present the lowest production costs on a national average is in Iraq, where costs per barrel produced is estimated to be about 16 US cents, in Saudi Arabia this figure is about 55 cents. Adelman argues that an oil price of about 5 $ per barrel would maintain investments in new reserves to cover predicted future demand, and provide the industry with a reasonable profit. Today prices, although low from the viewpoint of a producing country, are well above this estimated competitive price. According to Adelman ?The only theory which explains it is monopoly, whether of one or a small group trying to act as one, to restrain output to maintain prices? (Adelman 1987:47).

This is Adelman's way of pronouncing our dependent variable, the oil producer cooperation: `a small group trying to act as one'. The question then is what influences this group's ability to act as one, and is there a place for theories of international regimes in this picture? Hasenclever, Mayer and Rittberger find several differences even among theories inside the different schools of regime theories. I will therefore proceed by applying one concrete theory from each school.

Applying Regime Theories

Power-based explanation
The most prominent theory in the power-based school is the theory of hegemonic stability. This thesis is expressed by Duncan Snidal as follows: ?the presence of a single, strongly dominant actor in international politics leads to collectively desirable outcomes for all states? (Snidal 1985:579). In applying this to the oil-producer relations, the point of departure is that all actors have an interest in a collective limitation of production in order to ensure a high oil price. At the same time it is in the individual actors' interests to sustain their own production volume. In such case, the actors can gain by cooperating (reducing production), but individually they can earn more by not cooperating while the others do. This is the classical problem of collective action presented by Mancur Olson:

Olson actually states the hegemon argument himself when he claims that: ?One point is immediately evident. If there is some quantity of a collective good that can be obtained at a cost sufficiently low in relation to its benefit that some one person in the relevant group would gain from providing that good all by himself, then there is some presumption that the collective good will be provided.? (Olson 1965:22)

Duncan Snidal has also made an interesting distinction between benevolent and coercive hegemons (1985:285-90). The benevolent hegemon provides the collective good all by himself, while the other states can pursue a role as free riders. The coercive hegemon use its power to force others to contribute. The role of Saudi Arabia in the recent history of the international oil market resembles that of an hegemon, first benevolent and then coercive.

In 1981 Saudi Arabia produced more than 40 percent of total opec production. The Saudi Arabian government viewed the price pressure of that time to be a short-term problem. The Kingdom then took on a role as a `swing-producer' cutting its own production to sustain prices. The Saudi Arabian share of total opec output fell from above 40 percent to just above 20 percent from 1981 to 1985. This cooperative behavior of Saudi Arabia was not effective in the regime meaning of the word as the oil price continued to fall. This `swing-producer' strategy thus had some unpleasant effects on the Saudi Arabian government budgets, as illustrates.

Figure 1: Saudi Arabian government income

Source: Wilson & Graham 1994:192

In October 1985 Saudi Arabia changed its market strategy to regain its position by increasing production. This led to a collaps of oil prices in the spring of 1986. The Saudi share of opec production increased somewhat from 1985 to 1986, but more so when the Iraq?Kuwait war broke out. Then the hegemon took advantage of the situation and increased production, covering the missing Iraqi and Kuwaiti output. Later on, the un sanctions made it possible to sustain a high level of Saudi Arabian oil production.

The hegemonic behavior of Saudi Arabia is an important factor in oil producer cooperation. First in cutting own production from 1982 to 1985, and then, by changing its strategy, and thus wrecking the producers' control over prices. The spring of 1986 is the closest to a competitive market the oil market has been since Rockefeller took control in the 1880s. With the high level of Saudi Arabian production, and low price, as we have today, the hegemonic strategy might have emptied its potential, as it is hard to see any potential gains for Saudi Arabia from threats of further increases in production. Saudi Arabia is a dominant actor, but is now behaving as selfish and opportunistic as the rest. Furthermore it is doubtful if the theory of hegemonic stability can count as a theory of international regimes. Hasenclever, Mayer and Rittberger for instance argue that ?regime theory could be portrayed and indeed, to a considerable extent, has been developed as a conscious alternative to the theory of hegemonic stability and its implications for international cooperation? (1997:86).

Interest-based explanation
The second school of theories of international regimes, is the interest-based theories. In this category it seems appropriate to apply Robert Keohane's functional theory of international regimes, developed in his book After Hegemony from 1984. Hasenclever, Mayer and Rittberger (1997:27-28) describe this theory as the most elaborated theory of international regimes to date, that is 1997. This theory tries to tackle two important aspects that realists argue hinder cooperation:

  • The uncertainty about the future world and other actors' preferences, and
  • The possibility that other actors would behave opportunistic.

Keohane in this context outlines the role of regimes as follows:

the principle and rules of a regime reduce the range of expected behavior, uncertainty declines, and as information becomes more widely available, the asymmetry of its distribution is likely to lessen. Regimes provide standards of behavior against which performance can be measured. Arrangements within regimes [can] monitor actors' behavior [and] provides procedures and rules through which ... sanctions can be coordinated. (Keohane 1984:97-98)

Two aspects of the working of opec can be described in terms of this functional theory of regimes.

  • The first aspect is the role of the organization in providing information about the members' positions and the oil market in general. The more information the regime can provide, the less likely are misperception and misunderstanding among the member states.
  • The second relevant function of the opec regime is the detection of defectors. As pointed out by Keohane, ?some actors, may be dishonest, and enter into agreements that they have no intention of fulfilling? (1989:226). Although the regime cannot extinguish opportunistic behavior, it can increase the probability that opportunism will be detected. This should, other things being equal, make other actors more willing to enter into agreements with potential opportunists.

Without going into too much empirical detail let me briefly spell out the empirical relevance of this problem for the oil producer cooperation.

The members of opec meet regularly twice a year. From time to time also other oil producers tend to show up at the opec conferences in order to conduct informal meeting with opec members. At times of market disruptions extra-ordinary conferences can be convened. Taken together with the working of sub-committees and other bilateral or multilateral diplomatic interaction the frequency of communication and possibility of exchanging views and information is high. Since all decisions can be subject to discussions at every opec conference, one could argue that this in itself represents a `shadow of the future'. The frequency of meetings provides ?multiple opportunities for retaliation? to borrow a phrase from Arild Underdal (1994b:112). Should one actor give concessions at a conference on the condition that others do the same, it could always change this strategy only six months later. Every member knows that for instance the quota distribution is possible to revise a few months ahead. Together with reliable information about individual members' production, this provides crucial instruments for sanctioning of quota violations.

Incomplete information has always been, and still is, a problem for the opec cooperation, both regarding the actual prices different countries charged and regarding the actual production volumes placed on the market. Furthermore, factors outside the organization ? particularly future demand, the non-opec producers' behavior, and the international oil companies' stocking policy ? cause uncertainties regarding the price effects of opec members' behavior. This has created problems for the opec countries' ability to ?fine tune? their market operations in order to achieve the desired price. Incomplete information need not create problems for the effectiveness of the cooperation if the parties involved can trust each other and jointly adapt to the changed market situation and the new information. Then, none of the opec members would take advantage of the situation and let another member take on a larger burden. However, mutual trust is not characteristic for the relationship among oil producers. I shall develop this point further when I am going into the third category of regime theories.

Agreements thus need to be monitored. This became a pressing problem when the production sharing system, initiated in 1982, had worked, or rather not worked, for two years. In December 1984 the opec conference called for a system to provide full information on individual members' production exports and prices:

For this purpose, opec will create a Ministerial Executive Council.... [which] is empowered to take any measures it deems necessary to fulfill its tasks. The Council will be assisted by one or more reputable international auditing firms to provide a check on Member Countries' petroleum sales, tanker nominations, shipments, prices, quantities, etc. The auditing firm will be empowered to send its representatives to Member Countries to check the books, invoices, or any other documents that are deemed necessary by the firm in fulfillment of its tasks. Likewise the Council may choose any other means of check and control, such as tanker tracking methods, to be undertaken by consulting firms. The Council may also send its representatives to pay visits to the ports and loading terminals of Member Countries to provide check and control, besides the auditing firm's representatives. Member Countries undertake to make available to the auditors, their representatives and the representatives of the Council, all the required documents?. (opec 1990:226)

The unanimous adoption of this resolution was, in jurisdictional terms astonishing. The Ministerial Executive Council is empowered to apply any measures necessary, and the auditing firms are also given wide authority regarding inspections on member countries' territories.

Problems did, however, emerge when the monitoring was to be executed. At the 74th meeting of the Conference in August 1985, the Ministerial Executive Council informed the conference that five opec members had declined to co-operate fully with the auditing procedures and made various recommendations for improving the effectiveness of these procedures. The five countries concerned (which were not publicly named) agreed to open their books to the auditors in the future and joined the other member countries in approving a strengthening of the Council's monitoring methods. The Conference did not, however, accept a proposal by some member countries that the Council should be empowered to recommend the imposition of sanctions on countries where ?malpractices? were revealed as a result of independent audits. (Evans 1990:665)

So, the policy was monitoring, but no sanctioning. What was then the effectiveness of these institutional constrains on the market behavior of the opec members?

Figure 2: opec production and quotas (th.b/d)

Source: OPEC 1990 & Petroleum Economist

When we look at the development of price and quotas () one must admit that the changes in production seems to be rather unaffected by the quotas, with the possible exception of the period discussed, around 1984-85. But if we take a closer look at that period, and take out the hegemonic power we discussed earlier, we find that the adherence to the quotas did not increase after the monitoring arrangements was initiated. As shows the average adherence to the quotas appears because Saudi Arabia is well below its quota in this period. The other opec members do not abide more to the quotas in this period compared to other periods.

Figure 3: Production, quotas and monitoring

Source: OPEC 1990 & Petroleum Economist

It seems fair to argue that the costs of making agreements among oil producers inside opec is lower than outside the organization or what would have been the case without opec. Thus the presence of the organization or regime makes it easier for the producers to behave coherently in the market, but the degree of opportunistic behavior does not seem to change with institutional change.

The evaluative question regarding the contribution of theories of international regimes is however, how coherent would the oil producers behaved had it not been for the regime. This counterfactual question is the core of the empirical fruitfulness of theories in general. No elaborated and definite answer can be given in a paper like this, but the figures presented does not indicate that the institutional factors discussed so far, have been particularly important.

Knowledge-based explanations
The third school of theories of international regimes presented by Hasenclever, Mayer and Rittberger, is the konwledge-based theories. The strong version of this school focuses the role of regimes in formation of collective identities. Hasenclever, Mayer and Rittberger develop this theory with particular reference to Alexander Wendt's article from 1994 titled Collective Identity formation and the International State. Here Wendt studies situations where states' interests are not given, but endogenous to interaction: ?through interaction, states might form collective identities and interests, redefining the terms of Olson's [collective action] problem altogether? (Wendt 1994:384). Wendt (1994:388?391) outlines several causal mechanisms that ?promote collective state identities?. Here two aspects will be discussed. First, how an image of a common enemy might increase the actors' perception of common interests among themselves, increasing their cooperative behavior. Secondly, how states engaged in institutional cooperation might find themselves to be perceived as a model for others, an effect that might increase the self confidence of the cooperating parties.

Forming identity through a perception of a common enemy means that the cooperative behavior is developed as a result of states perceiving some kind of threats from other actors (Wendt 1994:389). Concluding his study ?Self and Other in International Relations?, Iver Neumann (1996:166?167) argues that ?the delineation of a self from an other is an active and ongoing part of identity formation. The creation of social boundaries is not a consequence of integration, but one of its necessary a priori ingredients? (end of quote). In other words: `no self without an other'. The resolutions adopted at the 1st opec Conference in September 1960 clearly indicate that the rationale behind the organization was as an instrument in the conflict between the producing states and the international oil companies. Particularly, the price policy of the companies triggered strong reactions from the oil-producing countries at that time. The very first sentence of the very first opec resolution reads as follows: ?[The] members can no longer remain indifferent to the attitude heretofore adopted by the Oil Companies in effecting price modifications? (opec 1990:1). The second resolution adopted established the ?permanent Organization of the Petroleum Exporting Countries for regular consultation among its Members with a view to coordinating and unifying the policies of the Members?. As the organization was established in opposition to the international oil companies and with the aim to unify the policies of the member states, the `us?them' relationship seems quite prominent in the initiation of the institutionalization of this cooperation. opec was not able to achieve the aims spelled out in the initial resolutions until the 1970s. But then an individual and far more effective instrument in the fight against the oil companies was applied. During the first half of the seventies most opec members simply nationalized their oil production. This made the relationship to the international companies of lesser importance, or, more correctly, made the international oil companies less important for the developments in the oil market. Consequently, ?the other?, having been one of the main reasons for the establishment of the organization, was no longer an important factor.

Creating common identity by being an example for others means that the members of opec might find it harder to leave or obstruct the working of an organization which has become an ideal for other countries.

When opec succeeded in raising the price of crude oil in 1973-74, it was interpreted as the beginning of a broader change in the relationship between the raw material producers in the South and the industrialized countries in the North. As pointed out by Helge Hveem ?After the events in the fall of 1973, opec became a model, radically strengthening the belief in the effectiveness of producer-exporter cooperation as a mean of promoting the interest of the periphery countries? (Hveem 1977:15). The opec summit of heads of state in Algiers in March 1975 was the peak of the role of opec as ?the shield of the Third World?, as the banners in the city proclaimed (Terzian 1985:213). Algerian authorities submitted several ?draft resolutions? covering, among other issues, an international conference on raw materials and development, a declaration dealing with the international monetary system, a kind of defense pact between opec members, and a project for an opec fund for development and international cooperation (ibid.: 213?214). All these proposals were referred back to expert groups for further considerations (Evans 1991:469).

The role as the shield or spearhead of the Third World might have built a positive common identity among the opec members in the spring of 1974, but these issues quickly disappeared from the agenda of the opec conferences. Only the proposal to establish a development fund has been implemented, and after the second oil price shock in 1979-80, the image of opec in the third world became more mixed. The developing countries oil import amounted to 11 billion dollar in 1973, 46 in 1975 and 89 billion dollar in 1980.

Both kinds of identity formation can thus be found in the case of opec. However, although having had some importance at particular points in time, they are not characteristic for the relationship among the opec members in general. The relationship between the members of opec is most of the time astonishingly instrumental. It is simply a matter of conducting international business. The common bonds between the opec members in other respects than oil, are weak (Claes 1998:165-195). Three members of opec have been at war with each other during the last two decades. Illustrating enough they simultaneously met at the opec conferences. There is no ambition in the organization to try to develop the cooperation between the members into anything broader than the present specific issue of oil. The broader political cooperation among some opec members in the Gulf Cooperation Council, is primarily established in conflict with other opec members. The political regimes in the member countries are very different. The members are spread over three continents, and include some of the poorest and some of the richest countries in the world. Differences, more than similarities characterize the members of opec. The oil producer cooperation is thus hardly explained by development of a common identity among the oil producing states.

Explanatory power of regime theories

Having applied a small selection of theories of international regimes on the cooperation among oil producing countries, it is time to turn to the evaluation of their contribution to our understanding or explanation of this empirical phenomenon. The value of a theory or explanatory factors is a relative matter. Arguing against the value of regime theory should be accompanied by an argument in favor of other theories or explanatory factors. I thus claim that the explanatory factors discussed so far have had a minor impact on the oil producer cooperation compared to factors related to the structure of the international oil market, and factors related to the market behavior and constellation of interests among the oil producing states.

Market structure
The market structure is important for the success or failure of oil producer cooperation, or more precise the probability of success or failure of oil producer cooperation. Let me highlight three feature of the market structure ? the changes in demand, the number of producers and the taxation of oil products. All structural, or at least contextual, factors for the cooperation among oil producers.

The demand for oil is important for the success of oil-producer cooperation, as it determines the volume possible to sell. The elasticity of demand expresses the changes in demand from changes in prices. If demand is inelastic, in other words that demand is insensitive to price changes, increasing prices inhere no risk for the producers as the consumed volume will be the same. If demand is more elastic, demand will fall when the price is increased. Thus, in a situation of inelastic demand, oil-producer cooperation more easily creates large benefits for the producers than in a situation of elastic demand.

As shown in the price increase in 1973-74 had little effect on demand the price increase of 1979-80 had. Consumption doubled from 1965 to 1979, but did not surpass the 1979 level until 1990.

Figure 4: World oil consumption

Source: BP Statistical Review of World Energy

Another problem for oil producer cooperation is the number of producers. The larger the number of oil producers, the harder it becomes to establish a successful cooperation among them, as the collective action problem is more severe in large groups than in small (Olson 1965:34?35). In small groups a large share of a particular members' contribution to providing a collective good is consumed by this member himself. This consumed share of the collective good is similarly small in large groups. Since the costs of providing the collective good is carried entirely by the contributor, or contributors, it is increasingly less likely that contributions to providing the collective good will pay off as the size of the group increases (Hovi 1992:79-87).

The number of producers in the international oil market has increased, partly due to the price policy of opec, which has made new production areas profitable to develop. The established producers have not been able to set up any barriers to such new entries. Thus, although demand increased opec's share fell during the first half of the eighties, as non- opec producers increased their market share (). This made successful oil-producer cooperation increasingly difficult.

Figure 5: World oil production

Source: BP Statistical Review of World Energy

In the second half of the eighties another problem for the success of oil producer cooperation emerged. The dramatic drop in the price of oil in 1986 was expected to stimulated a substantial increase in oil consumption. This did not happen. The reason for this is the tax policy of consuming countries. The falling crude oil price has been followed by an increase in taxation of oil consumption. Accordingly, the end user has not experienced any fall in oil product prices, and thus not had any price incentive to increase consumption. It follows that the oil producers have not been able to compensate the falling crude oil price with increased produced volume.

Figure 6: Trends in taxation of petroleum products

Source: opec Bulletin, June 1998.

In addition to these structural constrains, the oil producer cooperation is also a matter of states pursuing their economic interests in a coordinated way.

Interest constellation
One obvious reason for the emergence of cooperative behavior is the fact that actors have common interests. When the cooperation among the oil producing states started out, with the establishment of opec in 1960, and later with the Teheran and Tripoli agreements of 1971, it was a common front against the international oil companies that was the glue among the producing states. The producers wanted a larger share of the profits from oil production. Since the companies to some extent coordinated their behavior so did the producing countries. In the seventies the structural conditions was such that oil producers could increase the price of oil without having to cut back production. Increasing prices in such circumstances does not require cooperation. Individual producers are likely to figure out the benefits from increasing prices on their own. In the eighties structural conditions changed. With a flat demand, an increasing number of producers, and an increasing tax share on oil products, the oil producer cooperation became increasingly difficult.

Furthermore, except for some periods the behavior of the opec members has been as conflictious as cooperative. The opec conferences is as much an arena for conflicts as an arena for cooperation. Agreements are violated more as a rule than as an exception. In the seventies Saudi Arabia fiercely fought the other producers' policy, and in 1976 the opec countries actually implemented two different price policies (Claes 1998: 121-123). The fact that the price could not be raised without negative consequences for the market outlet for opec oil became evident in the beginning of the eighties. When the market-sharing mechanism ? the quotas ? was introduced, the costs of cooperation followed suit as the free-rider incentive appeared. Then the internal fight over market shares began. Although the collective action in the market can be regarded as a positive-sum game among the oil producers the market sharing itself is more like a zero-sum game.

James Caporaso (1993:482) argues that:

the fundamental contribution of regime theory is to move realism ... out of its zero-sum world and to use the theory of games to ask what kind of ... institutional arrangements actors would devise under different types of incentives ... In short, regime theory strives to provide a micro-basis for international institutions.

The zero-sum bargaining over market shares among oil producers, makes this particular case of international cooperation resemble a world in accordance with realist assumptions.

Furthermore, the market behavior of oil producers is not rule-based or rule-consistent. It is to a larger extent determined by the external pressure caused by structural changes of the oil market, and selfish and opportunistic behavior among the producers. The internal distribution of gains and costs of cooperative efforts has varied over time and among members, and there has been a strong tendency to cheat on agreed production levels. Thus we might talk about `institutionalized conflict'.


My task in this paper has been to say something about the value of certain theories, theories of international regimes, in explaining a certain empirical phenomenon, the cooperation among oil producing countries.

I feel confident in concluding that the explanations spelled out by regime theories misses the empirically most valid factors explaining the oil producer cooperation: the changes in the market structure, and the changes in the power relations and thus the interaction among the oil producers. None of these factors seems particularly `regimish'. Economic market theory, structural realism, and straight forward collective action models seems far more appropriate in the explanation of the particular empirical phenomenon called cooperation among oil producing countries.

The answer to the question put forth in the title of this paper: `what do theories of international regime contribute in the explanation of oil producer cooperation', is simply - not much.


* This paper is a slightly revised version of a trial lecture over assigned subject for the degree of doctor politicarum rerum, held at the Department of Political Science at the University of Oslo on 4th of December 1998. (The paper contains several figures which will not appear on the web.For a complete paper version of the paper, please go to our publications page.)

** ARENA, Postboks 1143 Blindern, 0317 Oslo, Norway, Tel.: +47 22 85 78 57, Fax: +47 22 85 78 32.


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[Date of publication in the ARENA Working Paper series: 15.04.1999]