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`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

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Jessy

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.

Bibliography

Bayulgen, 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>

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