Tutor HuntResources Politics Resources
`politics Is Powerfully Shaped By The Resource Curse In The Former Soviet Union`
Academic article for a module in Politics of Russia and the former Soviet Union
Date : 05/07/2016
Author Information
Uploaded by : Jessy
Uploaded on : 05/07/2016
Subject : Politics
Politics is powerfully shaped by
the resource curse in the former Soviet un ion as resource wealth in countries
such as Russia, Azerbaijan and Kazakhstan for example has allowed for a
platform from which to facilitate an authoritarian regime. In the case of
Russia, the resource curse has not caused an authoritarian system but it has
provided a platform for Putin to enact his own policies which have moved the
country in an authoritarian direction. In Azerbaijan, resource wealth allowed
for Aliyev to keep control of the elites and ensured a smooth succession from
him to his son. The case of Kazakhstan shows how different kinds of foreign
capital, dependent on resource wealth, can lead to a different kind of
authoritarianism, with the economic legitimacy of the state being bolstered but
the private sector still providing the possibility of some eventual
liberalization. Therefore, the resource curse in the former Soviet un ion can
have a large impact on the politics of different countries in the area.The resource curse stems from the
idea that when incomes rise, governments tend to become more democratic, unless
that rising income is a result of natural resource wealth, in which case the
democratizing effect shrinks or disappears. Furthermore, resource wealthy states
are more likely to suffer from civil wars. There are several causal mechanisms
for this effect to take place. The &rentier & effect states that resource-rich
governments get rents directly to them and therefore do not need to tax the
population, meaning that they also do not need to represent the population. The
&repression & effect argues that the income resource wealthy countries get
allows governments to increase their internal security, particularly
considering the higher likelihood of civil conflict, which also reduces
individual freedoms. Thirdly, the &modernization & effect identifies the causal
mechanism as that democracy comes from social and cultural changes which
resource wealth hinders. However, quantitative studies of the resource curse
have been impeded by problems with large numbers of dependent and independent
factors. Yet, this broad comparative framework can help show how the resource
curse can shape politics in the former Soviet Union.Russia does not obviously fit into
any of the three causal mechanisms detailed in explaining whether resource
wealth leads to authoritarianism but Russian politics is shaped by the resource
curse because its economic strength allows for Putin to push the country in a
direction he wants & in this case, authoritarian. The &rentier & effect is not
particularly powerful in Russia due to the distinction between the state
exploitation of natural resources and the state taxing private companies who
exploit natural resources. Most oil in Russia is produced by independent,
private companies as opposed to state owned ones. The share of oil produced by
majority-state owned companies was between 37% and 42% in 2008.[1]
This means that the rents coming directly to the state are not as significant
as in countries where the companies who extract the natural resources are
entirely state-owned. Furthermore, the size of Russia &s population means that
its annual income per person is quite small, with revenues from oil and gas
exports in 2006 coming to around $1340 per person, which is a bit below the
level of Australia.[2]
This means that the Russian state does still need to tax its population, unlike
countries in the Persian Gulf such as Kuwait whose taxation revenue makes up
just 1% of its GDP. [3]
The &modernization & effect has been equally unfeasible in explaining the impact
of resource wealth on politics due to the fact that the Soviet Union
industrialized without mass demands for democracy until Gorbachev &s
regime. It has relatively high rates of
educational and scientific achievement, as well as an unusually high rate of
female labour participation meaning that it is not the case that when natural
resources were discovered, the country was not modernized. However, just
because these effects have not been seen to have an impact in Russia, it does
not mean that resource wealth has not altered Russian politics. Rising oil and
gas prices lead to periods of economic growth in Russia which generates support
for the president. With greater support, presidents tend to have more leniency
to do what they want, and with Putin &s 80% approval ratings, he has been able
to move the country in a more authoritarian direction. It is not therefore the
case that the resource curse in Russia has made the country more authoritarian.
But the resource curse has allowed Putin to follow the direction he has chosen
with greater ease due to periods of economic growth, and this direction has
been authoritarian.Azerbaijan &s resource curse has
allowed for the authoritarian regime to successfully stay in power even through
the period of Colour Revolutions by placating opposition within the regime.
This can be understood through the lens of the &rentier & effect. Azerbaijan
signed the &Contract of the Century & which was a 30 year production-sharing
agreement with 10 oil companies to develop oil fields, meaning that &the state
would benefit from foreign technical expertise without losing control of how
the resulting revenues would be used &.[4]
This meant that by 2000, oil was 40% of government revenues.[5]
Aliyev used resource dispersal to placate the people he correctly acknowledged
as threats and so to weaken the opposition. He used patronage to maintain a
system whereby regional clefts did not occur to disrupt his authoritarian
regime. When Aliyev got cancer and began to attempt to facilitate his son
rising to power, he was able to use the rents from oil revenue to maintain such
a system. The &repression & effect also can be seen in how a colour revolution
did not take place as continuous harassment of civil society before and after
Georgia &s Rose Revolution, with protests following the victory of I.Aliyev
being easily put down. Furthermore, oil revenues remained concentrated among
the elites, thus reducing the space for private commerce leading to a lack of
any independent business community. Western involvement and interest in oil in
Azerbaijan also meant that they were not concerned with helping support the
opposition there. There was consequently a stable succession from father to son
in the Azeri authoritarian regime which was enabled predominantly by the
existence of natural resources in the country. A strong security system could
be paid for, elites could be bought off, and the West were willing to turn a
blind eye in return for their oil. Therefore, even if natural resources in
Azerbaijan did not cause an authoritarian regime, in this case they allowed for
its continuation at what could have been a pivotal possibility for regime
change following the death of Aliyev. The case of Kazakhstan
demonstrates how the resource curse can lead to a softer form of
authoritarianism depending on the proportions of foreign capital entering a
country. Different kinds of foreign capital are likely to have different
impacts on regimes. For example, Armenia and Georgia both receive significantly
higher amounts of foreign aid than other states in Central Asia and the
Caucasus with these tending &to strengthen the political influence of the donor
governments and international organizations &.[6]
This can allow for democracy to be pushed, although this has not often been the
case. This contrasts with foreign direct investment (FDI) which has been
concentrated in the natural resources of Azerbaijan and Kazakhstan. In
Kazakhstan, whilst onshore oil production has been privatised there remain a
lot of important assets still fully or partially in state hands, and
&government officials &screen major FDI proposals and determine the government
share &.[7]
This kind of FDI symbolically empowers authoritarian leaders by demonstrating
that external, foreign investors trust their economic management. Yet, foreign
capital in the form of commercial loans to the private sector can
hypothetically encourage regime change by strengthening the private sector
against the government. So whilst in Kazakhstan large volumes of FDI in the
state-controlled energy sector gives power and legitimacy to the authoritarian
state the &foreign capital flowing into the private sectors of the economy & in
the form of commercial loans and even very little portfolio investment & allows
for a vibrant private sector to form that may push for economic and political
liberalization eventually &.[8]
This suggests that the resource curse can shape politics in Kazakhstan by
currently legitimising the authoritarian government but could in the future
help support a burgeoning business opposition which could allow for democratic
transition.In conclusion, politics is
powerfully shaped by the resource curse in the former Soviet Union, but this is
not necessarily in the way much theoretical literature on the resource curse
supposes. Whilst it has been traditionally thought that resource wealth causes
authoritarianism, the link in the former Soviet un ion is indirect and not
inevitable. In Russia, resource wealth has shaped politics by giving Putin the
economic growth required to allow him to have the support he needs to carry out
his policies. Whilst these have been authoritarian, that is not due to the
resource wealth itself, but rather the nature of his politics. In Azerbaijan,
resource wealth has allowed for the authoritarian Aliyev regime to be sustained
through the handover from father to son by making sure that elites are
economically tied to regime, meaning that Azerbaijan missed the opportunity to
have its own colour revolution. In Kazakhstan, resource wealth has shaped
politics due to high levels of foreign direct investment giving a legitimacy to
the authoritarian government but also opening up the possibility of a business
opposition in the future. Therefore, the resource curse has shaped politics in subtly
different ways across the former Soviet Union. BibliographyBayulgen, O (2005) &Foreign
capital in Central Asia and the Caucasus: curse or blessing? lt;/p>Haber, S and V. Menaldo (2011),
&Do Natural Resources Fuel Authoritarianism? A Reappraisal of the Resource
Curse? lt;/p>Radnitz, S (2012) &Oil in the
family: managing presidential succession in Azerbaijan lt;/p>Ross, M (2001) &Does Oil Hinder
Democracy? lt;/p>Treisman, D (2010) &Is Russia Cursed
by Oil? lt;/p>
This resource was uploaded by: Jessy