Generally it is perceived that when the income of a country increases, governments are inclined to become more democratic. However, an exception to this rule is the negative correlation between high oil revenue and democracy, which many scholars have studied while some conclude that oil hinders democracy. The idea that oil wealth has a role in inhibiting the transition from autocratic regimes to democracy has been empirically tested by using advanced statistical techniques.
Despite evidence of the harmful effects of oil revenue on the political regimes of oil-rich Middle Eastern and Sub-Saharan countries, it is, however, not restricted to any particular part of the world. While it is important to establish the connection between oil wealth and democracy, in the case of Russia however, the link between oil abundance and increasing authoritarianism may have been overstated.
Not only have democracies of oil rich Middle Eastern countries suffered from the resource curse - being resource-rich but somewhat lacking in democratic credentials coupled with authoritarianism, democracies in oil rich countries in Africa, Asia and Latin America have also been prey to such democratic paucity. Russia is also perceived as a country that suffers from the resource curse. This has been said to impede Russian democracy and has doomed the country to authoritarianism for the foreseeable future.
In his seminal article, The First Rule of Petropolitics, Thomas Friedman described these countries as ‘Petrolist States’, meaning that significant parts of their GDP’s have come from oil revenues, and, without exception, their political systems are far from being democratic. According to Friedman, “the higher the average global crude oil price rises, the more free speech, free press, free and fair elections, an independent judiciary, the rule of law, and independent political parties are eroded”.
This point of view can be bolstered by the fact that when oil prices go up, leaders of oil rich countries, such as Russian President Vladimir Putin or Former Venezuelan President Chavez, have paid little attention to what the world says about their political regimes. However, when oil prices go down it has been suggested that petro-rich state leaders are more prone to respect political freedom, permit more transparency and give more attention to attracting foreign investment in order to boost their respective economies.
A number of mechanisms have been proposed to find evidence for the relationship between oil abundance and democracy. Political Scientist, Michael Ross, for example, has used three causal mechanisms in trying to define the relationship between oil wealth and authoritarian rule.
The first causal mechanism is called ‘the rentier effect’ through which governments implement low tax rates and spend excess oil revenues to lessen democratic pressures. Additionally, governments prevent any new form of social movement that might be likely to demand more political freedom. When an oil rich country gets its revenue from exportation of its mineral resources, then it is unlikely that the resource rich country would levy high taxes on its citizens. Therefore in return, the public would not expect more transparency, accountability or extra government representation.
In Russia, even though tax rates are nowhere near as low as those of oil rich Middle Eastern countries, after the comprehensive tax reforms that took place in 2001, the income tax rate was reduced from 30 percent to a flat tax of 13 percent; similarly as of 2001, corporate tax was cut from 35 percent to 24 percent. Although tax codes and tax rates changed considerably in Russia along with substantial tax reforms, the reduction in the tax rate does not appear to be the result of high oil revenue, but rather that reforms were needed to bolster the economy and reinvigorate the stagnated manufacturing and service sectors.
Another rentier mechanism that has been put forward by Ross, is called the ‘spending effect.’ This proposes that oil revenues boost the governments’ budget so it can spend excess revenues on buying support with an agenda of diminishing pressure for democratic upheaval. This has been seen when Putin came to power through the substantial increases he implemented in Russia in the average pension and minimum wage which have boosted Putin’s popularity by up to 80 percent. Therefore, the spending effect has worked for the Russian case and consequently undermined democratic consolidation in the country.
The last major rentier effect is described as a ‘group formation effect’, in which oil-rich governments might use excess revenues to dampen and impede the formation of new social groups. This causes a weakening of the existing social organizations and “thereby blocks a necessary precondition of democracy”. There is no doubt that democracies flourish with the efforts of social institutions which are independent from the state. However, an authoritarian leader would use any measures in his/her power to stifle independent and democratic institutions, which would favor democratization and thus NGOs became targets of the regime. It should be noted that weakening civil and democratic institutions, along with a policy of depoliticizing society, have not only been the main aim of repressive oil-rich countries, but has also been on the agenda of repressive oil-poor authorities as it has been the case for the resource-rich African countries.
NGOs in Russia, with the aim of promoting democracy and increasing the awareness of the effects of an autocratic government on ordinary citizens, under the rule of President Putin, have had to face clamp downs. Whereas it has been argued that under the rule of former Russian President Yeltsin he “put relatively little policy infrastructure in place to regulate NGOs.” Despite the fact that oil prices were cheaper in the Yeltsin era in comparison with Putin’s era, it is not clear yet how much Putin’s decision to pursue more repressive approaches towards NGOs has been affected by the oil price surge.
The second causal mechanism named ‘the repression effect’ argues that oil-rich countries’ spend a considerable portion of their budget on military and security measures to block the democratic aspirations of their citizens. Oil revenues have been used to employ a more highly trained police force. Additionally, oil cash has been used to invest in high technological equipment to monitor citizens. These are the clear steps that can be taken by repressive authoritarian regimes to combat political dissidents.
Finally, ‘the modernization effect’ is another causal mechanism used to evaluate the link between oil and authoritarianism. Democratization theories suggest that with social transformation, democracy can be deepened and consolidated. Additionally, through economic development, which would result in occupational specialization, industrialization and urbanization, demand for government accountability might increase. Consequently, authoritarian rulers would need to watch social transformation very closely in order to control the increased bargaining power of highly specialized and skilled citizens who might challenge authority. If advanced education levels do not arise from economic growth, then failure to initiate democratization is likely.
Once the modernization effect is applied to the Russian case, it could be claimed that this mechanism does not have any effect on the Russian democratic deficit at all, considering the fact that Russia has already been industrialized, urbanized and has had highly specialized education during the rule of the Communist Party. According to the modernization effect, heavy political control would not be easy to impose over a highly educated population, as in Russia’s case with a very high proportion of women in the workforce as well as with many scientists. Clearly in Russia, the imposition of authoritarianism has been achieved without great difficulty. The modernization effect, therefore, is insufficient in offering an explanation as to Russia’s increasingly authoritarian tendencies and its stalled democracy.
Being rich in mineral resources, particularly in oil, in the field of political economics has been argued to be linked to the slower transition to democracy and an increased inclination towards autocracy. By using advanced statistical approaches, the negative relationship has been demonstrated between oil wealth and democracy, especially in the Middle East and Africa. However, the same statistical linkages have been weaker in the Eurasian region, particularly in Russia, where democratic credentials have been eroded.
As Daniel Treisman suggests, even though “the pattern of evidence worldwide is generally consistent with the claim that Russia would be more democratic today if it had no oil or gas at all,” the impact of turbulence in the revenue of oil and gas has not had a significant enough effect to change policy attitudes towards permitting greater democratization. Therefore, it could be asserted that oil wealth has had only a minor effect on Russia’s political regime and its relations with democracy. Probably one needs to take into account other factors in order to better grasp Russia’s inclination towards authoritarian rule before blaming the oil revenue curse for its democratic deficiencies.
Given the causal mechanism argument, it could be implied that ‘taxation’ and ‘spending’ effects have certain correlations with the current Russian authoritarian rule. However, linkages with ‘modernization’, ‘group formation’ and ‘repressive’ effects have been weaker in terms of the support for evidence that might be associated with oil abundance. The increase in oil revenue as a percentage of Russia’s GDP has had little effect on Russia’s democracy. Therefore, Russian democracy has indeed been undermined by the increasing share of oil in its GDP but has only had a minor impact.
