"politics Is Powerfully Shaped By The Resource Curse In The Former Soviet Union." Discuss.

To refer to any relationship between politics and an abundance of natural resources as a resource curse, automatically assumes the correlation to be a negative one. Certainly the literature surrounding the impact of bountiful resources on political freedoms and democratization concludes that there are overwhelmingly negative effects and any developments due to it usually move towards authoritarian regimes rather than democracy. Michael Ross finds three causal mechanisms that link oil wealth with authoritarianism; the rentier effect, repression effect, and modernization effect. The rentier effect is a direct consequence of a state gaining wealth through its control of a country's natural resources. By preventing them from being in the hands of private companies, the state itself generates a more than ample income from rents and requires little participation from the people in the generation of wealth. In a rentier state there is no need to charge high taxes, some governments barely charge any tax at all, and there is also little incentive to respond to the people or ensure adequate widespread employment, given that neither of these are required to provide the government with the funds it requires or simply desires. Ross's second causal mechanism, the repression effect, looks at the way in which states are enabled by their assets to fund a strong repressive force against its own people. Naturally this is a difficult impact to measure given that the extent of internal pressure is not information countries may feel obliged to make available, even to those inside their own boundaries, let alone to external political scientists. Finally, Ross turns his attention to the modernization effect. The relationship he derives between oil wealth and authoritarianism exists in countries where there has been little industrialization due to a lack of a popular movement and, following from that, a lack of service sector jobs. However, much of the research that has explored the correlation between political freedoms and natural resources has focused on the Middle East. With a very different political history and, in many cases, a more abundant stock of natural resources, there can be many other contributing factors feeding into the prevalence of authoritarian regimes in resource rich countries. Furthermore, a condition that separates the former Soviet countries from the rest of the world is the extremely high level of perceived corruption. Corruption has the potential to be a strong driving force shaping politics in the former Soviet Union and needs to be assessed alongside the role of the 'resource curse'.

The strongest link between resource wealth and authoritarianism is in the creation of a rentier state. With a small number of exceptions, such as Norway, rentier states are predominately authoritarian and the regimes have remained resistant to the threat of democratization. The oil rich states of the Persian Gulf have plentiful incomes, generated from their natural resources, and this allows them to place very small tax burdens on their citizens. In Bahrain the revenue gained from taxes is only 4-5% of the GDP, and in Kuwait it is even lower at nearly 1%. Yet, even with very small tax incomes, these regimes are still able to provide extensive social services for their citizens. In Qatar there is no personal income tax, no personal property tax, and no sales tax, but the state is able to provide more provisions than any government in the West could hope for. Qataris receive free education, free healthcare, free telephone access, housing allowances, free plots of land, and a guaranteed job within their civil service upon graduating from high school. With such extensive provisions, very few people would campaign for much more. That's the basis for the argument that a rentier state keeps an authoritarian regime in power. Throughout history, campaigns for democracy have been fought under the idea of 'no taxation without representation' and today, in rentier states, this idea still remains; through not forcing taxes on people, they avoid providing an incentive for a fight for representation. It could be argued that given Russia's extensive natural reserves, it has the ability to act in this way, and thus, strengthens its regime against further democratization. However, when looking at the former Soviet Union states we need to realise the difference between abundant natural resources and a rentier state. Russia does have a large supply of oil, metals and raw materials, they made up 76% of their total exports in 2000, but they do not have a sufficient supply to negate the need for taxes. Annual taxation in Russia equals 72% of their total government spend with the majority of federal revenues coming from VAT. Given that Russia relies on taxation, despite enjoying the gains generated by natural resources, it cannot be considered a rentier state. Even so, the natural resources have had a clear impact on the politics of the region and can be seen to have contributed to the progression towards authoritarianism. The cash flow brought in by the oil wealth, that appears similar to that of a rentier state, demonstrates that the natural resources Russia has have been part of what has shaped Russian politics. However, to fully explore the impact of a potential 'resource curse' we must look further at the impact of these resources.

A commonly assumed consequence of resource wealth is enabling the state to increase levels of coercion and repression. By providing accessible funds that a state does not need to owe to the people (in the way that they would with taxes) the regime is capable of providing further funding for internal repression. This a very difficult marker to assess, particularly for external political scientists, but both Michael Ross and M. Steven Fish have attempted to determine repression levels using separate measures. Ross looked at the frequency of torture, extrajudicial killings, political imprisonment and disappearances attributable to the government; he found that oil rich rich states were no more repressive than non-oil producing states. M. Steven Fish, on the other hand, assessed repression based on percentage of population in the military forces and percentage of gross national income that goes towards the military. Fish found both were good indicators of repression and had a negative relationship with political openness. Though in the particular case of Russia they did not highlight a huge variation from the global standard; the proportion of the Russian work force employed within the armed forces is similar to the global average at 1.2%. However, in terms of expenditure, Russia deviates from the global norm. With a global average of only 3% for gross national income taken by the military in 1999, Russia sat comfortably outside this with 5.6%. These figures give us an indication of higher levels of repression within Russia but it cannot be used conclusively. Given that much of the internal political control is carried out by the KGB, now the FSB, we cannot assess the level of funding that is directed specifically at internal operations. Henceforth, we have no completely reliable data that tells is there is more repression in the well resourced former Soviet Union states in comparison to the rest of the world. The final mechanism that Ross looks at between oil wealth and authoritarianism is the modernization effect; oil wealth can produce growth without modernization. Ross concludes that Russia has an amount of growth without the expected modernization and determines that Russia exhibits the modernization effect as part of the resource curse. M. Steven Fish, however, uses four indicators of modernization (televisions, telephones, fertility rates, and literacy rates) and finds there to be more modernization than Ross concluded. Though modernization levels are not what we would expect in more western countries, they are high enough that Russia is more closely reflecting European standards than oil-rich standards. Henceforth, if there is a modernization effect at work within Russia, it is to a very small scale and could not be contributing extensively to a resource curse, certainly not enough to compensate for the lack of a rentier effect. Therefore, the three causal links that are seen to explain the correlation between oil wealth and authoritarianism do not seem to have a leading role in explaining such a relationship within Russia. This does not, however, mean that there is not a causal explanation for the correlation. We must now look at more distinctly Soviet characteristics to attempt to find an explanation for the hypothesis that resource wealth leads to lower levels of democracy.

Corruption has been a major factor in the shaping of Russia's, and other former Soviet states', political systems. Unlike what we expect in the west, corruption does not just occur in dark corners or behind closed doors, it is in the daily lives of many citizens of former Soviet states. From bribing traffic police through to buying a pass grade at university, it appears there is very little you cannot buy. Bribery within education is so common that a newspaper in the city of Donetsk, Ukraine, printed a 'price list' for grades within local colleges and universities. These ranged from as low as $10 each for inclusion in a group option through to $80 for a good grade in an exam that had already been failed. Despite this clear commonality, education did not even top the charts of most bribes spent department with bribes to police and health services equaling almost half of a household's bribes. Similarly, bribery within business has practically become the usual route by which things get done. 87% of Russian business men surveyed between 1997-1998 reported facing extortionist bureaucratic pressures, these were mostly in their attempts to gain permits or licenses. With bureaucratic corruption clearly the social norm in the region, it would be unsurprising to see corruption is as rife within politics. One such corrupt political practice was observed in the 1999 election of President Kuchma. By encouraging an atmosphere of impunity, officials were coaxed into corruption and later blackmailed for their support by threatening exposure and prosecution. This attitude of everyone being involved in corruption runs deeply through the politics of the former Soviet states contributing to the shaping of the states. But is this corruption fueled by the resource wealth of the region? William Tompson looked at corruption figures across Russia to determine whether it was more prevalent in areas that dealt with oil production. Regional Corruption Indices from 2002 were only available for forty out of the eighty-nine federal regions, and many of the most resource wealthy were amongst those missing, giving us an incomplete picture of corruption. However, what the available figures told us was very important. They showed that the highest levels of corruption existed on the border areas, unsurprisingly, but also that even the less corrupt areas were not significantly lower than the worst. A study of the figures determined that corruption did not occur in pockets, resourced or not, but was exceedingly widespread and appeared to be almost unaffected by the proximity to resource production. Henceforth, the widespread corruption observed across Russia appears unaffected by the alleged resource curse. However, when it comes to high politics, there is a closer correlation between political direction and resources.

During the Communist era there were no large salaries to be gained, instead, loyalties were repaid through access to otherwise unattainable luxuries and provisions such as cars and property. This tradition of there being further benefits attached to jobs than simply the usual salary has continued into current regimes and is closely linked with the resource wealth of the region. Unlike more diverse resources, point resources are easier to monopolize and a zero-sum contest for capture is most likely to result in the control going to those who control the state. This is precisely what occurred in Russia. The monopolies of oil, gas and minerals were put under the control of loyal members of the old elite and by providing them with the economic means to stay in control, the resource wealth effectively stagnated both the politics and economics of Russia.

Former Soviet states do not have access to the level of resources that countries in the Persian Gulf do. For these oil-rich middle eastern state resources provide the majority of their income and they are fully formed rentier states. While it can be argued whether, for these countries, the resources they have are a useful resource or a curse, this is not a question to be addressed in this essay. I will, however, state that it is these countries that the term 'resource curse' can be applied to, whereas, in the case of the former Soviet region, there are not adequate levels of natural resources to hold the potential to curse the nations. As discussed above, these countries are not rentier states, nor do they lack the modernization in the way that 'resource cursed' states usually do. Rather, they have significant supplies but only to a similar extent (when measured per capita) as countries such as Australia. Therefore, we cannot say that the politics of the region has been shaped by a resource curse, given that it does not appear to exist. We can, however, conclude that the resources of the region have contributed by enabling the already corrupted political elite to cement themselves and, thus far, protect themselves from any waves of democracy.