Unpacking the Political Resource Curse: How Oil Fuels Personalism and Undermines Democratization

by

Farid Guliyev

a Thesis submitted in partial fulfillment of the requirements for the degree of

Doctor of Philosophy

in Political Science

Approved Dissertation Committee Prof. Dr. Matthijs Bogaards_____________ Name and title of Chair Prof. Dr. Marco Verweij Name and title of Committee Member Prof. Dr. Heiko Pleines Name and title of Committee Member

Date of Defense: December 17, 2014

Humanities and Social Sciences

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Abstract

Oil wealth is often associated with prolonged authoritarian rule, poor governance and other institutional pathologies. These unusual effects of petroleum have been variously described as the ‘Paradox of Plenty’ (Karl 1997), ‘Natural Resource Trap’ (Collier 2007), and the ‘Oil Curse’ (Ross 2012), and an increasing number of studies have examined the causes and effects of the oil curse (Humphreys et al. 2007). However, the prevailing assumption in most studies has been that oil will have an equally strong anti-democratic effect across authoritarian regime types (Ross 2001; 2012; Jensen and Wantchekon 2004; Haber and Menaldo 2011). Theoretical and empirical studies on the resource curse have ignored institutional differences in authoritarian rule emphasized by scholars of authoritarian politics (Linz and Stepan 1996; Geddes 1999; Schedler 2009; Geddes, Wright and Frantz 2014). In this study, I combine these two strands of literature and show that oil has a particularly dire effect on the democratization prospects of a particular subtype of authoritarianism, namely, personalist autocracies. Personal rule, or simply personalism, closely related to Weber’s notion of patrimonialism and its modern adaptations, such as Neopatrimonialism (Médard 1982; Clapham 1985; Bratton and Van de Walle 1997), ‘Big Man Rule’ (Hyden 2006) and Sultanism (Chehabi and Linz 1998; Linz 2000; Stepan and Linz 2013), denotes a political regime dominated by a strongman who concentrates all policymaking in his hands, in which political office is occupied by public officials in pursuit of private goals, and in which power is exercised through patron-client networks rather than legal-rational bureaucracy (Roth 1968; Geddes 1999). The analysis of regime development patterns across oil and non-oil producing states presented in this study shows that oil wealth particularly strongly harmed democratization prospects in the personalist sub-set of authoritarianism. Personalist regimes with oil wealth – such as those in Iraq, Libya, and Yemen in the Middle East, Congo (Brazzaville), Cameroon, and Sudan in Sub-Saharan Africa, and Azerbaijan and Kazakhstan in post-Soviet Eurasia – have, unfortunately, successfully avoided transitions to democracy. Oil was a true political “curse” for personalist regimes to a much greater extent than it was for other (party-based and military) categories of authoritarian rule. Using three country-case studies of Azerbaijan, Cameroon, and Venezuela, I illustrate the ways in which oil can reinforce personalism and undermine the democratization processes and suggest that the causal channels linking oil and regime outcomes (authoritarian durability and democratic transitions) depend on the composition of authoritarian rule in place, and may not be uniform across regime types. The case of Venezuela under Chávez also indicates that in democratic regimes with a long history of oil-induced elite corruption, oil wealth may contribute to the personalization of power in a failing democracy.

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Acknowledgements I owe a great deal to colleagues, friends and family. First, my thesis supervisor, Professor Matthijs Bogaards, deserves a special gratitude for his advice and support. Over the course of my PhD work, he guided me through the research process and provided invaluable feedback. His suggestions helped make the final version of this dissertation a more coherent piece of work. His own scholarship has provided an intellectually stimulating example. I would also like to thank Dr. Marco Verweij and Dr. Heiko Pleines for agreeing to be part of my dissertation committee. A graduate colloquium convened at the Research Centre for East European Studies (FSO) of the University of Bremen brought together a group of PhD fellows – Alla, Eduard, Katerina, Lusine, Nozima, Inna, Saipira, Vera – and served as a small, but vibrant, community for intellectual exchange. There, I first presented an early draft of my survival analysis and received helpful comments. An earlier version of my Azerbaijan case study was presented at a conference around a book project on the Caspian oil boom held at the FSO in December 2010. I would like to thank Dr. Heiko Pleines, Dr. Andreas Heinrich and Dr. Andreas Heinemann-Grüder for the engaging discussion and detailed comments.

I had the opportunity to discuss my project with Prof. Andreas Schedler during his visit to Jacobs University in November 2011 and benefitted from his generous comments. An earlier draft of the Cameroon case study was presented at the workshop on Electoral Authoritarianism and Democratization in Africa organized by Prof. Bogaards and Dr. Sebastian Elischer at the Leuphana University Lüneburg, November 2013.

At various stages, my doctoral study was partially supported by funding from the OSI Global Supplementary Grant Program and my host institution, Jacobs University.

At Jacobs University, my friends and colleagues Irina Chiaburu and Julia Kusznir provided encouragement in the final years. Irina taught me a great deal about Soviet animation and various forms of subversion during our usually long conversations, and in times of hardship offered her compassion. In Baku, I am grateful to Gursel Aliyev, Yulia Aliyeva and the entire team at the Caucasus Research Resource Center (CRRC) (an “island of academic freedom” in the country) for hosting me during the spring and summer of 2013. My Baku friends Kamil, Kanan, Turkhan and Yusif made my days in Baku more enjoyable and their first-hand experiences and insights they shared with me enriched my understanding of the intricacies of Azerbaijani politics.

My former professor at Khazar University and now colleague and close friend, Dr. Anar Ahmadov, who is now Assistant Professor at Leiden University, has been a source of inspiration and encouraged me along the way. In the most insurmountable circumstances of my life, he taught me to concentrate on what was important.

Finally, I am grateful to my family in Baku, especially my mom Elmira, for their patience and support, as well as my “Baltic” cousin Leyli for providing me with a true home away from home on occasional trips to Riga.

Portions of Chapter 1 and 4 in this dissertation draw on published research papers written by this candidate as the sole author. According to copyright agreement, the author retains the right to include the published material in his thesis, provided that acknowledgment to prior publication in the journal or book is made explicit:

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• Guliyev, F. “Personal Rule, Neopatrimonialism, and Regime Typologies: Integrating Dahlian and Weberian Approaches to Regime Studies”, Democratization 18: 3 (2011), 575-601. Copyright Taylor & Francis Group, DOI: http://dx.doi.org/10.1080/13510347.2011.563115

• Guliyev, F. “Political Elites in Azerbaijan”. In Andreas Heinrich and Heiko Pleines (eds.) Challenges of the Caspian Resource Boom. Domestic Elites and Policy-Making. Houndmills: Palgrave Macmillan, 2012, pp. 117-130. Copyright Palgrave Macmillan.

• Guliyev, F. “Oil and Regime Stability in Azerbaijan”, Demokratizatsiya 21:1 (2013), 113-147. Publisher: Institute for European, Russian and Eurasian Studies, George Washington University, URL: http://essential.metapress.com/content/r2g1w8r80862kn3h/

- Farid Guliyev Bremen, November 14, 2014

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Table of Contents

Abstract ............................................................................................................................. ii

Acknowledgements ......................................................................................................... iii List of Tables .................................................................................................................. vii

List of Figures ................................................................................................................ viii Introduction .................................................................................................................... 1

Summary of the argument ......................................................................................................... 1 The curse of natural resources .................................................................................................. 7 Why oil? .................................................................................................................................... 8 The research problem .............................................................................................................. 11 The empirical strategy and findings ........................................................................................ 13 Oil and personalism: Contribution to theory .......................................................................... 15 The plan of the Thesis ............................................................................................................. 18

Chapter 1. Excursus on Authoritarianism ................................................................. 20 1.1. Authoritarian differences ................................................................................................. 20 1.2. “New institutionalism” of authoritarianism ..................................................................... 25 1.3. Classic typology ............................................................................................................... 30 1.4. What is personalism? ....................................................................................................... 32

Chapter 2: The Curse of Petroleum Wealth .............................................................. 41 2.1. Introduction ...................................................................................................................... 41 2.2. Economic effects .............................................................................................................. 41 2.3. First generation: The rentier state theory ......................................................................... 43 2.4. Second generation: Correlational studies ......................................................................... 47

2.4.1. More oil, less democracy .......................................................................................... 47 2.4.2. Spurious relationship? Measurement issues ............................................................. 48 2.4.3. Effects on democratic transitions / authoritarian survival ........................................ 52 2.4.4. Link to modernization theory ................................................................................... 53 2.4.5. Effects on democratic consolidation / democratic survival ...................................... 54 2.4.6. Effects on regime stability ........................................................................................ 55

2.5. Third generation: Conditional theories ............................................................................ 59 2.6. Conclusion ....................................................................................................................... 62

Chapter 3. Oil and Personalism: Cross-country Evidence ....................................... 66 3.1. Introduction ...................................................................................................................... 66 3.2. Hypotheses ....................................................................................................................... 67 3.3. Some empirical evidence for the oil-personalism link .................................................... 81

3.3.1. Methods and measures ............................................................................................. 81 3.3.2.Analysis ..................................................................................................................... 87 3.3.3. Survival estimates ..................................................................................................... 89

3.4 Oil, personalization and the case of scrapping term limits ............................................. 106 3.5. Conclusion ..................................................................................................................... 117 3.6. Appendix: List of oil-producing states and their respective regime type ...................... 118

Chapter 4. Oil, Personalism and Regime Stability in Azerbaijan .......................... 120 4.1. Introduction .................................................................................................................... 120 4.2. Perspectives on Azerbaijani elites and politics .............................................................. 122 4.3. Evidence ......................................................................................................................... 123

4.3.1. Power concentration ............................................................................................... 123

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4.3.2. Public administration, patron-client networks and patronage possibilities ............ 124 4.4. Elite Composition .......................................................................................................... 126 4.5. The oil economy and rent capturing .............................................................................. 128

4.5.1. Oil and the economy ............................................................................................... 128 4.6. Threats to regime stability ............................................................................................. 133

4.6.1. Intra-elite threats ..................................................................................................... 133 4.6.2. Societal opposition ................................................................................................. 136

4.7. Continuity and coherence .............................................................................................. 138 4.8. Conclusion ..................................................................................................................... 140

Chapter 5. Oil, Personalism and Regime dynamics in Cameroon ......................... 144 5.1. Background .................................................................................................................... 144

5.1.2. Introduction ............................................................................................................ 144 5.1.3. Regimes in oil-rich African states .......................................................................... 144 5.1.4. The oil-personal rule link ....................................................................................... 148

5.2. Cameroon case study ..................................................................................................... 148 5.2.1. Introduction ............................................................................................................ 148 5.2.2. Pre-oil context: Authoritarian state-building under Ahidjo .................................... 151 5.2.3. Biya’s rule (up to the early 1990s) ......................................................................... 154

5.3. The economic and political effects of the oil boom ....................................................... 156 5.4. The economic crisis and political liberalization ............................................................ 161 5.5. Biya’s post-crisis survivability ...................................................................................... 165 5.6. Conclusion ..................................................................................................................... 167

Chapter 6. Oil, Personalism and Regime Dynamics in Venezuela ......................... 169 6.1. Introduction .................................................................................................................... 169 6.2. Historical background .................................................................................................... 169

6.2.1. Before the Punto Fijo pact ...................................................................................... 169 6.2.2. Punto Fijo and the crisis of democracy .................................................................. 171

6.3. Chávez: Oil and regime consolidation ........................................................................... 175 6.3.1. Oil dependence ....................................................................................................... 175

6.4. Strategies of personalization .......................................................................................... 177 6.4.1. Constitutional changes ............................................................................................ 177 6.4.2. Delegative tendencies ............................................................................................. 178 6.4.3. Subordination of PDVSA to presidency and changes in oil governance ............... 179 6.4.4. Rolling back on decentralization reforms and recentralization .............................. 181 6.4.5. Social programs and clientelism ............................................................................. 182 6.4.6. Elite recruitment, institutional packing .................................................................. 185 6.4.7. Electoral competition .............................................................................................. 185 6.4.8. Personalism and the risks of diversification ........................................................... 188

6.5. Populism ........................................................................................................................ 189 6.6. The role of the military .................................................................................................. 189 6.7. Corruption and mismanagement .................................................................................... 191 6.8. Political movement, not a party ..................................................................................... 191 6.9. Conclusion ..................................................................................................................... 192

Conclusion ................................................................................................................... 194 References .................................................................................................................... 197

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List of Tables 0.1. Oil rents as percentage of GDP, 2012 1.1. Classic and new approaches to the study of authoritarian regimes 1.2. Paradigmatic cases of personal rule 2.1. Three generations of political research on the “resource curse” 2.2. Oil and regime stability: Summary of causal mechanisms 3.1. Durability of different types of authoritarian regimes 3.2. Predicted impact of oil and the type of authoritarianism 3.3. Duration of regimes by oil 3.4. Distribution of regimes within oil- and non-oil states 3.5. Spread of regime types across oil- and non-states 3.6. Regime failures in oil- and non-oil states 3.7. Number of regime failures by oil in different regimes 3.8. Number of democratic transitions by oil in different regimes 3.9. Number of democratic transitions among oil-rich authoritarian regimes by regime type 3.10. “Pure” personalist regimes in oil states that have been “immune” to democratization 3.11. Democratic transitions in oil-rich states 3.12. Democratic regimes in oil states 3.13. Survival analysis results summarized: effect of oil on regime outcomes 3.14. Oil production years and type of authoritarianism 3.15. Executive constraints in oil-rich personalist and party-based regimes 3.16. Executive constraints and the 2004 oil boom 4.1. Share of public sector employment in total employment in Armenia, Azerbaijan and Georgia 4.2. Size of the public sector in Armenia, Azerbaijan and Georgia 4.3. The composition of the Azerbaijani elite, circa 2009-10 4.4. GDP per capita in Azerbaijan, Armenia and Georgia 4.5. Public finances in Azerbaijan 4.6. State Oil Fund (SOFAZ) assets and transfers to the state budget 5.1. Oil production in the Gulf of Guinea states 5.2. Political regimes in the oil-rich Gulf of Guinea states 5.3. Geddes regime coding of the oil-rich Gulf of Guinea states 5.4. Cameroon - Oil revenue as percentage of government revenue 5.5. Cameroon - government revenue, oil revenue, and government expenditure 5.6. Parliamentary election results for Cameroon

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List of Figures 0.1. Theoretical model: Oil, authoritarian structure and regime outcomes 3.1. A model of democratic and autocratic transitions 3.2. Kaplan-Meier Survival estimates by oil 3.3. Kaplan-Meier Survival Estimates for oil and non-oil producers by regime type 3.4. Kaplan-Meier Survival Estimates (event of interest: democratic transition) 3.5. Kaplan-Meier Survival Estimates with data split into personalist and non-personalist regimes (event of interest: democratic transition) 4.1. Azerbaijan: Crude oil production, 1980-2010 4.2. Azerbaijan: Petroleum income per capita in US dollars 5.1. Oil production in Cameroon 5.2. Cameroon: Petroleum income per capita in US dollars 5.3. Venezuela: Petroleum income per capita in US dollars

 

   

1

Introduction

Summary of the argument

A growing literature in comparative politics has examined the pernicious effects of oil

on democracy (Ross 2014).1 A large number of studies show that states that rely on oil

rents for their existence exhibit an apparent “paradox of plenty” (Karl 1997): oil is

associated with poor economic performance (Sachs and Warner 1995) and civil war

(Ross 2004a, 2006). More strikingly, however, oil states tend to suffer from a

democracy deficit (Ross 2001; 2012), commonly known as the “political resource

curse” (Morrison 2007).2 While statistical evidence for the “oil hinders democracy”

claim is abound, the causal links, processes and mechanisms underpinning the resource

curse as well as conditions that turn resource wealth into a curse remain under-specified

and insufficiently understood.3 A considerable portion of scholarship on the resource

curse largely relies on correlations and large-N analysis and has paid insufficient

attention to context and the causal mechanisms4 (Heinrich 2011) and to what Linz and

Stepan (1996) call “the institutional composition of authoritarian rule”.

In this study, I focus on variation in authoritarian power structure – especially

the distinction between party-institutionalized and military types of rule and personal

rule – to demonstrate that among authoritarian regime types, personalist regimes5 suffer

more severely from the political resource curse.6 In fact, as the present analysis shows,

oil-supported personalist regimes never made a transition to democracy. Using case

studies, I demonstrate that the reason for this regularity of democratization “blockage”

in the personalist sub-set of authoritarianism is that oil perpetuates and fuels

personalism in autocracies and failing democracies and does so to a much greater extent

than previously recognized. There are several ways in which personalism facilitates and                                                                                                                1 “Oil” refers to oil and natural gas (Ross 2012). 2 Morrison (2007) suggests the term “political resource curse” to refer to oil’s anti-democratic effects. Dunning (2008) coined the term “authoritarian resource curse”. I use both terms interchangeably. 3 The term “democracy” is used in the procedural terms to refer to a type of political regime in which government is chosen through regular, competitive elections with inclusive suffrage and in which fundamental civil liberties are respected (Dahl 1971; Diamond 1999). Authoritarianism refers to political regimes that do not meet the criteria of the expanded procedural minimum (Collier and Levitsky 1997). 4 Broadly speaking, causal mechanisms are understood as “links between inputs (independent variables) and outcomes (dependent variables)” which “tell us how things happen” (Falleti and Lynch 2009, 1146-1147). 5 For simplicity, I use the term “personalist regime” to refer to “personalist authoritarian regime”. 6 The terms “authoritarian regime”, “autocracy” and “dictatorship” refer to nondemocratic regimes and are used interchangeably throughout this study (Gandhi and Przeworski 2007).

 

   

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amplifies oil’s democracy-dampening effects. First, personalism provides a more

favorable political-institutional setting for power concentration and a more conducive

environment for rent-seeking, elite-level corruption, patronage, and other strategies of

authoritarian cooptation. Oil supplies resources necessary to fund these transactions.

Second, personalist (sultanistic) rulers destroy independent centers of power and

opposition to a greater extent than their counterparts in military and single-party

regimes making it very difficult for regime opponents to challenge the ruling elites

(Linz and Stepan 1996). Oil makes this task of organizing and mobilizing opposition

even more arduous, if not practically unfeasible. In short, the oil-fueling-personalism

interaction presents a particularly inimical set of conditions for democratic reform to

take place.

Personalism denotes a form of state/regime (these two are thoroughly fused

under personal rule) organization in which power is concentrated in the executive, often

a strongman or supreme leader, and in which “relationships of a broadly patrimonial

type pervade political and administrative system which is formally constructed on

rational-legal lines” (Clapham 1985, 48-49; Bratton and van de Walle 1998; Geddes

1999). When all of these features are present in a regime, I refer to such a regime as

“personalist”.

The related phenomenon of personalization of state power refers to the process

by which political leaders discard pre-existing institutional constraints, concentrate

decision-making power in their hands and infuse state institutions with rules and logic

of clientelism and patrimonialism. The extreme form of personalism is called sultanism

(Chehabi and Linz 1998). In sultanistic regimes, the ruler whose decision-making

powers are “unrestrained” by ideology or legal-rational norms disregards the distinction

between the private and the public, and the rule of law is virtually absent. The “ideal-

type” sultanistic polity essentially becomes the personal domain of the ruler (Bendix

1962; Linz and Stepan 1996, 52). Because patrimonial and clientelistic structures

dominate in empirical regimes that approximate the sultanistic type, “pacted

transitions”, or any peaceful democratic change by reform for that matter, are

(unfortunately) highly unlikely in this type of regimes. The personalistic leader is likely

to be removed by a violent uprising or revolution (Huntington 1991-92). As Stepan et

al. put it succinctly in a recent analysis of Arab Uprisings, “[r]egimes with sultanistic

features – Muammar Gadhafi’s Libya or Bashar al-Assad’s Syria – have no peaceful

 

   

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‘exit option’” (Stepan et al. 2014, 41). Backed by large amounts of discretionary funds

from oil revenues, the former Libyan leader deliberately eliminated state and

government institutions and coerced anyone manifesting opposition to his personalistic

rule (Vandewalle 1998). As the Libya expert Vandewalle pointed out, “in a sense, the

real tragedy of Libya has been that Gadhafi has very systematically destroyed whatever

institutions were in the country” (NPR 2011).

Oil helps personalist rulers to prolong their regimes’ stability by concentrating

economic resources and political power in the hands of the ruler and his support

coalition and by making peaceful democratic change structurally speaking unavailable.

As this study shows, oil fuels personalist tendencies in authoritarian regimes and might

have a similar effect in failing democracies. Introduced into the institutional setting of a

personalist autocracy, oil revenues perpetuate the arbitrary norms and clientelistic

structures that are at the core of personal rule. Oil may also contribute to the rise of

personalism in a patronage-based democracy like Venezuela under Chávez.

In party-based and military regimes, oil wealth can make it easier for an aspiring

ruler seeking to concentrate political power in his hands to achieve this goal. This often

results in the personalization of the regime. Consider the following example. During the

mid- to late-1970s, Iraq’s revenues from oil exports “skyrocketed” due to the surge in

the price of oil (Metz 1988). Amid the oil boom, Saddam Hussein was consolidating

power away from the then dominant Ba’ath Party. By 1979, on top of an oil boom,

Saddam achieved full control of the state as he officially rose to the presidency. This

event marked a

“decisive shift, already under way, from a one-party state to a personal, autocratic regime, dependent … on Saddam Hussein and his close family members and cohorts… Personal loyalty became critical. The party was weakened as an institution, and what little pluralism and balance had remained at the top disappeared. [This] personal autocracy focused on one man and his whims … and the party was reduced to an appendage” (Phebe Marr quoted in Moon 2009, 130; also see Tripp 2003).

About 60 senior members of the Ba’ath Party were purged publicly during that year

(BBC News 2013).

Existing studies of the resource curse approach the measure of the political

regime in an aggregate way as a homogenous residual category, while a more fine-

 

   

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grained appreciation of authoritarian regime differences allows one to more accurately

assess the magnitude of oil’s effects in different political systems. It shows that oil-

fueled personalism annihilates the potential for democratic change. In the personalist

regimes with significant oil endowments, like Iraq (Birdsall and Subramanian 2004) and

Equatorial Guinea (McSherry 2006), all regime transitions, which were already less

likely and less frequent than in their non-oil personalist counterparts, historically led to

the replacement of an old autocracy with a new one. With a few provisional periods

lasting less than 3 years (as the short-lived government of Elchibey in Azerbaijan in

1992-93) and in some cases (as in Biya’s Cameroon in the early 1990s) despite strong

mass-based opposition, none of the oil-rich personalist regimes ever had a transition

leading to a lasting democracy, while a comparatively larger number of oil-rich party-

based regimes, such as Mexico and Indonesia, and the military regimes in Argentina,

Bolivia and, to a certain extent, Nigeria did democratize despite their oil. Oil-rich

monarchies were equally unlikely to experience a democratic transition although the

results in this case were not statistically significant. Oil had the effect of blocking

democratization only in personalistically-governed regimes. While other studies have

shown that oil postpones democratization in all autocracies irrespective of their regime

type (Jensen and Wantchekon 2004; Ross 2012) or that oil only affects authoritarian

durability, but not democratic transitions (Wright et al. 2012), my study shows that oil’s

effects are relevant for both outcomes and that the democracy-hindering effects of oil

are particularly pronounced in personalist dictatorships. In essence, oil-fueled

personalism made democratic transitions in such regimes non-existent. To put it

differently, while scholars hold that a political “curse” is likely to afflict all autocracies

reliant on oil equally, I argue that oil has the strongest democracy-inhibiting effect in

personalist regimes. In fact, oil is literally a curse (without the figurative quotation

marks) for this, namely personalist, kind of authoritarianism.

The main argument of this study is that oil drives the incentives for the ruler to

personalize power. Where personalism was the defining feature of the regime before

oil’s onset, oil will reinforce the personalist tendencies because of the leader’s

temptations to maximize power and because personalist dictators are facing relatively

low costs when they choose to eliminate the pre-existing constraints that restrict their

rule. Scrapping presidential term limits by many autocrats in oil-producing states, such

as Algeria, Azerbaijan, Cameroon and Venezuela, discussed in Chapter 3, provides a

 

   

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good illustration for this tendency. Similarly, oil might have a personalizing effect on a

democracy in which previously an interaction of oil rents and patronage-based party

rule has come to be associated with public service venality and elite corruption, as was

the case in Venezuela by the early 1990s.

Personalist regimes display no tolerance of opposition and try to eliminate any

pockets of autonomous power to such an extent that transition to democracy in such

settings becomes extremely difficult (Linz and Stepan 1996). Oil enabled personalist

rulers, like Gadhafi in Libya, Saddam in Iraq and Biya in Cameroon, to concentrate

power in their hands even more which had the effect of undermining the forces of

political opposition seeking democratic change from both within the regime and from

societal opposition. As a consequence, even in times of economic crisis, as in Cameroon

in the early 1990s, when the Biya regime could not longer rely on oil as the source of

patronage and the regime was challenged by strikes and mass-based protests, the pre-

crisis policies shaped the political arena in the incumbent’s favor to such an extent that

by the time of the economic crisis the political opposition was lacking resources and

capabilities to unseat the long-lasting dictatorship of Paul Biya while the incumbent

enjoyed French financial support that substituted for the dwindling oil rents.

Similarly, in Azerbaijan, analyzed in Chapter 4, when the death of the former

president Heydar Aliyev in 2003 opened a window of opportunity for the political

opposition to challenge the regime, oil and personalism made this possibility incredibly

difficult to materialize. The monopolistic control and distribution of oil rents towards

the regime elites coupled with the organization of state power on the basis of patronage

networks during the 1990s produced a strong sense of personal allegiance to the ruling

president and deprived political opposition groups of the financial resources. This

complicated the emergence of moderate elites from within the elite and limited the

space for the development of opposition forces from society. The regime founder

constructed the “vertical of power” centered on the presidency (or the individual

occupying the chief executive office) and relied on a network of patronage groups

organized around regional identities, commonly known as “clans”. During his decade-

long rule, Aliyev consolidated the regime around a close-knit group of elites, appointed

loyalists to key state offices and eliminated any serious challenges to his rule. When oil

revenues began to increase, he used the “unearned income” to cement his strategic

alliance within a group of key regime players. Because of this patron-clientelistic

 

   

6

organization of the system of rule, presidential power was transferred from the ailing

father to his son, Ilham, without facing any visible opposition from inside the elite.

After succeeding his father in the presidency, the son Aliyev was in need to regain the

support of his father’s old guard elite (Radnitz 2012). As the father-to-son succession

(2003) almost coincided with the start of the multi-billion dollar oil boom (2003-04),

elite consolidation proceeded rather smoothly. In a short period of time, he was able to

reconfigure the regime elites around his leadership in a personalistic manner similar to

his father’s, using rewards to supporters and coercion against opponents. While the

formal political opposition parties were weakened throughout the 1990s (Sultanova

2014), by the early 2000s they were still acting as a “small constraint on the ruling

elite’s power” (Ahmadov 2011, 208). In about five years after the start of the new oil

boom era, these organizations were badly emasculated and were no longer represented

in the parliament elected in 2010 (Pearce and Guliyev, n.d). Oil money also served as a

substitute for statesmanship for the younger leader in the sense that although Ilham

Aliyev, unlike his father, lacked the skills of a Machiavellian politician, “his rule

enjoyed a constant stream of oil money, which made it easier to buy supporters and

suppress opponents” (Shirinov 2013, 2).

Rule of law and constitutionalism in Azerbaijan exist only on paper. Courts are

used as the president’s tool to punish opponents and as a mechanism of selective

repression. A recent example includes the arrest of a political opposition leader Ilgar

Mammadov who was put in jail on alleged charges of instigating riots in the provincial

town of Ismayilli in January 2013 (Amnesty International 2013), although it seems

more plausible that his arrest was meant to prevent him from running for presidency in

October 2013 (Guliyev and Pearce 2013). President Aliyev also used an oil fund, which

was set up in the early 2000s and put under the president’s exclusive control (Aslanli

2012), as the cushion against economic crisis during oil price downfalls. The state oil

company (SOCAR), too, has been under the president’s personal control and used as

“cash cow” for the government (Kjærnet 2012). As in Cameroon, the extreme

personalism of the regime (sultanism) in Azerbaijan made it exceptionally difficult for

any opposition to mount a coordinated action against the two-decade rule of the

incumbent elites. In sum, by reinforcing the personalist tendencies, oil created the least

favorable political environment for democratic change to take place.

 

   

7

The curse of natural resources

There is by now a large body of empirical research on the harmful effects of petroleum

resources on the economy and political-institutional development of oil-producing

countries. The resource curse theory has posited that mineral resources, notably oil and

natural gas, cause countries to grow slower than normal (Sachs and Warner 1995, 2001;

Auty 2001). There is also ample evidence that oil can be a hindrance to democratization

(Barro 1999; Ross 2001, 2009, 2012; Jensen and Wantchekon 2004; Ulfelder 2007;

Aslaksen 2010; Ramsay 2011; Andersen and Ross 2011; Tsui 2011; Ahmadov 2014).

Empirical tests of the “authoritarian resource curse” hypothesis have yielded a

statistically robust inverse correlation between oil and levels of democracy suggesting

that oil windfalls tend to promote authoritarian rule.

The claim that “oil promotes authoritarianism” can refer to any of the following

causal inferences: 1) irrespective of regime type in place, oil makes political regimes

less democratic; 2) oil hinders democratic transitions in already authoritarian regimes

or, in other words, oil promotes authoritarian survival; and 3) oil prevents democratic

consolidation and leads to authoritarian reversals in minimally democratic regimes.

While different studies have found empirical support for each of these claims, there is

an emerging consensus that the political resource curse thesis refers only to the second

link, namely, situations in which oil hinders democratic transitions in existing

autocracies (Ross 2014). If oil inhibits democratic transitions in existing autocracies, it

is reasonable to ask if these effects vary with the institutional composition of the

authoritarian regime in place.

In the aftermath of World War II, an overwhelming majority of oil states (with a

notable exception of Latin America) had authoritarian regimes. Due to a high

concentration of oil wealth in the state rather than the private sector after the wave of oil

nationalizations took place in the 1960-70s (Kobrin 1985; Ross 2012), authoritarian

rulers used oil rents to perpetuate their stay in power. The availability of oil revenues

helped authoritarian regimes to survive and avoid democratization even in spite of

growing external and internal pressures to democratize associated with the third wave of

democratization from the mid-1970s onwards (Huntington 1991). Some oil states, such

as Nigeria, Congo, Algeria and Azerbaijan, made attempts – albeit unsuccessfully – to

initiate democratic change. A few of these states, notably Indonesia in 1998 and Mexico

in 2000, eventually managed to transition to democracy. However, everywhere, except

 

   

8

Latin America (Dunning 2008), oil rents promoted authoritarianism and prevented

democratization. Alongside quantitative support for the authoritarian resource curse,

case studies drawn from individual country experiences documented the negative

political effects of oil windfalls. The notion of the resource curse has become a

conventional wisdom among pundits and journalists. The New York Times columnist

Thomas Friedman (2006, n.p.) went so far as to formulate “the first law of

petropolitics”, according to which “the price of oil and the pace of freedom always

move in opposite directions in oil-rich petrolist states”.

Why oil?

Oil has several unusual properties which are thought to be responsible for certain

political outcomes. First, compared to other natural resources, oil exports generate more

profit rents for the state (Karl 1997, 238; Collier 2007, 43). Rents are the excess of

revenues from oil over all costs associated with its extraction and production. Not all

resources produce such excess profits that have the power to transform the state into a

“rentier state” (Dunning 2008, 39-42; Dunning 2009, 5). Because of the amount of rents

oil exports generate, the receipt of oil windfalls by governments is often compared to

the effect of “manna falling from heaven” (Karl 1997). According to Karl (1997), oil

windfall revenues tend to induce rent-seeking activities by politicians and bureaucrats

competing to capture a share of the “oil pie”. In the context of weak governance and

unrestrained fiscal process that characterize many states in the developing world, such

rent-seeking can have dire consequences for economic growth and the development of

state bureaucratic institutions.

Second, oil belongs to the type of spatially concentrated or “point-source”

resources whose production is capital intensive and requires large sunk costs. The

opposite of point-source resources is “diffuse” resources (such as agricultural produce,

forestry, and fisheries as well as certain types of mineral resources, such as alluvial

diamonds). These are normally extracted by private actors and do not necessarily

generate large amounts of rents for the state (Auty 2001; Le Billon 2001; Dunning

2009).

Finally, oil fiscal revenues are vulnerable to high fiscal volatility due to frequent

fluctuations in the world oil price (e.g. Gelb and associates 1988), as the current oil

price fall demonstrates. Because of unpredictability and volatility of their oil revenue,

 

   

9

oil states are exposed to severe negative supply shocks (Dunning 2005; Smith 2007)

raising the risks of long-term fiscal sustainability. As Barnett and Ossowski (2002, 3)

put it, “[t]he unique fiscal challenges for an oil-producing country stem from the fact

that oil revenue is exhaustible, volatile, and uncertain, and largely originates from

abroad.”

Table 0.1. Oil rents as percentage of GDP, 2012 From highest to lowest

Countries Oil rents as % of GDP

Countries

Oil rents as % of GDP

Congo, Rep. (Brz) 71.0

Lithuania 0.2

Kuwait 53.8

Italy 0.2 Libya 52.3

Mozambique 0.1

Equatorial Guinea 51.4

Austria 0.1 Saudi Arabia 45.8

Moldova 0.1

Iraq 45.5

Netherlands 0.1 Gabon 44.1

Poland 0.1

Angola 42.1

Chile 0.1 Oman 37.2

Czech Republic 0.0

Azerbaijan 35.8

Germany 0.0 Venezuela 26.7

Bulgaria 0.0

Chad 26.4

Greece 0.0 Brunei Darussalam 25.1

France 0.0

Kazakhstan 24.9

Slovak Republic 0.0 Iran 22.0

Morocco 0.0

United Arab Emirates 21.9

Spain 0.0 Turkmenistan 20.6

Israel 0.0

Bahrain 19.4

Japan 0.0 Ecuador 19.1

Jordan 0.0

Algeria 17.1

Korea, Rep. 0.0 Nigeria 15.3

Armenia 0.0

Yemen 14.5

Belgium 0.0 Russian Federation 13.9

Benin 0.0

Qatar 12.1

Bangladesh 0.0 Trinidad and Tobago 11.0

Bosnia and Herzegovina 0.0

Norway 9.4

Botswana 0.0 Colombia 8.0

Switzerland 0.0

Egypt 8.0

Costa Rica 0.0 Cameroon 8.0

Cyprus 0.0

Vietnam 7.6

Dominican Republic 0.0 Mexico 6.8

Eritrea 0.0

Malaysia 6.0

Estonia 0.0 Ghana 5.5

Ethiopia 0.0

 

   

10

Bolivia 5.4

Finland 0.0 Sudan 4.9

Hong Kong 0.0

Albania 4.7

Honduras 0.0 Tunisia 4.4

Haiti 0.0

Cote d'Ivoire 4.1

Ireland 0.0 Uzbekistan 3.4

Iceland 0.0

Canada 3.2

Jamaica 0.0 Argentina 2.9

Kenya 0.0

Brazil 2.7

Cambodia 0.0 Indonesia 2.6

Kosovo 0.0

Congo, Dem. Rep. 2.6

Lebanon 0.0 Thailand 2.2

Sri Lanka 0.0

Mongolia 2.1

Luxembourg 0.0 Denmark 2.0

Latvia 0.0

Peru 1.6

Macedonia, FYR 0.0 Belarus 1.5

Malta 0.0

Serbia 1.5

Montenegro 0.0 China 1.4

Namibia 0.0

Romania 1.4

Nicaragua 0.0 India 1.2

Nepal 0.0

United Kingdom 1.0

Panama 0.0 United States 0.9

Portugal 0.0

Pakistan 0.9

Paraguay 0.0 Australia 0.8

Senegal 0.0

Ukraine 0.8

Singapore 0.0 Kyrgyz Republic 0.7

El Salvador 0.0

New Zealand 0.7

Slovenia 0.0 Guatemala 0.7

Sweden 0.0

Croatia 0.5

Togo 0.0 Hungary 0.3

Tanzania 0.0

Tajikistan 0.2

Uruguay 0.0 Philippines 0.2

South Africa 0.0

Turkey 0.2

Zambia 0.0 Georgia 0.2

Zimbabwe 0.0

Source: World Bank, Development Indicators, http://data.worldbank.org/indicator/NY.GDP.PETR.RT.ZS Note: Oil rents as a percentage of GDP measure the difference between the value of crude oil production at world prices and total costs of production. A country may be considered highly resource dependent when oil rents account for at least 5 percent of its GDP (van der Ploeg 2010). These cases are marked in bold in the table.

Moreover, analysts often distinguish between oil wealth (or abundance) and

dependence on oil wealth. Resource dependence indicates that oil rents account for a

significant part of government fiscal revenue. Highly resource-reliant states are often

called the rentier states. Countries such as the U.S. and Canada are abundant in oil and

gas resources, but since they possess a highly diversified structure of the economy,

 

   

11

these states are not dependent on oil. In contrast, in countries like the Republic of

Congo (Brazzaville), Kuwait and Libya oil rents can account for as much as half of the

country’s GDP (see Table 0.1) and supply most of government revenues in those

countries.

Finally, economists distinguish between “low-absorbing” and “high-absorbing”

oil exporters (Gelb 1988; Auty 1990). Low-absorbers are economies with small non-oil

sectors with restricted capacity to absorb oil windfalls that accrue to the state coffers.

Examples include Saudi Arabia, Kuwait, UAE, and Bahrain. In contrast, high-absorbers

have more diversified economies allowing them to deploy larger capital inflows (Auty

1990, 95). Examples of high-absorbing countries are Malaysia, Indonesia, Nigeria, and

Cameroon. Similarly, Karl (1997, 17-19) uses the terms “capital-deficient oil exporters”

(which corresponds to the “high-absorber” category) and “capital surplus countries”

(which corresponds to the “low-absorber” category) to capture the difference in per

capita oil reserves and absorption capacity.

In sum, the oil curse is a phenomenon that most scholars expect to strike those

states that live off the large amounts of rents generated by oil exports.

The research problem

As noted above, the most credible interpretation of the political resource curse

phenomenon is one that emphasizes the ways in which oil reduces the probability of

authoritarian states to democratize (Ulfelder 2007; Andersen and Ross 2011; Wiens et

al. 2014). Luciani (1994, 134), for example, pointed out that “[authoritarian] states that

do not face a fiscal crisis and enjoy continuing access to exogenous rent will be able to

postpone democratization indefinitely”. In this view, authoritarian survival is held as the

dependent variable.

However, despite strong evidence supporting the negative effect of oil on

democratization, a number of problems remain. First, studies have overwhelmingly

focused on an average rather than ultimate effect of oil on the political regime

(Ahmadov 2014). Second, contextual conditions and causal mechanisms connecting the

two variables of interest remain insufficiently explored, and authoritarian regimes are

largely treated as a homogenous category. As Basedau (2005, 9) pointed out, “nobody

would argue that the [resource] ‘curse’ strikes over night once resource extraction or

production has begun. There are certain transmission channels or causal mechanisms

 

   

12

that might turn resources into problems”. Third, it is not clear how oil interacts with

relevant regime-related and other political institutions and within different political

contexts. And, finally, the fact that oil had no authoritarian effects in Latin America

appears to be an empirical anomaly, prompting Dunning (2008) to develop a conditional

theory to account for the Latin American exception.

What do we know about the causal links underlying the resource curse? While

scholars identified a number of causal paths, there seems to be little consensus on what

causal mechanisms are more important and whether a general causal mechanism-based

theory of the oil curse is possible at all. Low levels of taxation and fiscal autonomy of

the state (the “rentier state” literature), investments in repressive apparatuses (Ross

2001; Bellin 2004), increased public spending (Beblawi and Luciani 1987; Luciani

1994), patronage (Robinson et al. 2006), rent-seeking (Karl 1997), corruption (Fish

2005), state ownership of oil (Jones Luong and Weinthal 2006, 2010), expansion of the

state (Ross 2008), strong party and state institutions preceding oil production (Smith

2006, 2007), incumbency advantage and discretion over rent distribution (Wantchekon

2002; Jensen and Wantchekon 2004), each has been identified as a crucial intermediate

variable connecting oil rents to either democratic regression or persistent

authoritarianism as an outcome variable. However, it remains unclear which of these

mechanisms (or their combination) are more important and in which authoritarian

regimes. Most evidence on the causal mechanisms is based on single-case studies and

their generalizability (external validity) is rarely tested in cross-national analysis.

One of the most salient distinctions in the literature on authoritarian regimes has

been a distinction between personalist autocracies and other, more (formally)

institutionalized, forms (Geddes 1999) with important empirical implications for

different outcomes, such as economic development, corruption, war, and regime

transitions (This literature is reviewed in Chapter 1). However, this crucial analytical

distinction between types of authoritarian rule have been somewhat neglected in the

existing resource curse literature.

My study aims to address the following research question: Is oil equally harmful

for the survival and democratization of personalist and other kinds of authoritarian

rule? To put it differently, are personalist regimes more likely to suffer from an oil

curse?

 

   

13

Rather than measuring the average effect of oil on levels of democracy that has

proven to be sensitive to the choice of measurement for both oil and the political regime

(Ahmadov 2014), this study starts with the assumption that the effects of oil might vary

predictably with the type of regime in place and that the interaction between oil and

authoritarian institutions might influence the durability of regimes and their probability

to democratize. Estimating the survival likelihood of different regime types confirms

this expectation and points to the tendency of personalist regimes to avoid democratic

transitions altogether. In order to explore the workings of the oil-personalism link at a

less macro level, I present three case studies. Using the logic of process-tracing (George

and Bennett 2005; Bennett and Elman 2006; Gerring 2007), I examine the causal

processes through which oil fuels and perpetuates personalism in authoritarian regimes

and failing democracies by analyzing three regimes: Azerbaijan, Cameroon and

Venezuela.

The empirical strategy and findings

The research design is informed by a mixed-method methodology that combines

quantitative analysis with case studies. In the nested-analysis approach, the researcher

starts with a large-N analysis and select cases based on the robustness of large-N results.

Since my results of the analysis of broader patterns are sufficiently convincing to

support the hypothesized relationship, cases were chosen for model-testing rather than

model-building (Lieberman 2005). Therefore, the selected cases represent ‘typical case

study’. According to Seawright and Gerring (2008, 299), “because the typical case is

well explained by an existing model, the puzzle of interest to the researcher lies within

that case.” A typical case is chosen to look more in depth into the workings of causal

processes and mechanisms.

In addition to nested analysis, my case selection follows the most-different

systems design (Przeworski and Teune 1970; Gerring 2007). The cases are different on

all variables except for two variables of interest: the key independent variables (oil

wealth and personalism) and the outcome variable (regime stability and

democratization). Causal processes represent the mutually-reinforcing interaction

between oil and personalism that blocks democratization in the otherwise very different

societal and cultural settings.

 

   

14

My theoretical model draws on theories of authoritarian politics (Linz and

Stepan 1996; Bratton and van de Walle 1997; Geddes 1999) that highlight systematic

differences in the institutional arrangements, logics and strategies of political survival

characterizing different kinds of authoritarian regimes. To capture the qualitative

differences between formal and informal institutional characteristics of authoritarian

regime, I relied on Geddes’ coding of authoritarian regimes available as a dataset

(Geddes et al. 2014). Geddes’ (1999) original conceptualization of authoritarianism

differentiated between categories of military, single-party, personalist autocracies, and

their hybrids, and now also includes monarchies. Some scholars defined personal rule as

a residual category (Ezrow and Frantz 2011) or shed it from regime typologies

(Hadenius and Teorell 2007). Unlike them, I treat personalist authoritarian rule as a

political regime type on its own or as an important dimension of the political regime. I

recognize, however, that for some research purposes it can be more helpful to think of

personalism (or sultanism) as a matter of degree, or as Stepan and Linz (2013, 26)

explain:

“[r]egimes can be almost entirely sultanistic in their characteristics or have some, but not many, sultanistic characteristics. It is useful to view sultanism as a continuum, for whether a regime is more or less sultanistic will affect the potential range of transitions away from sultanism that are open to it.”

Furthermore, personalism can be seen as both a systemic feature and a strategy

in the ruler’s hands. As a system, personalist regimes are characterized by high degree

of concentration and centralization of power in the executive (single-man leadership),

neopatrimonial public administration, and the instrumental use of the patron-client

network. Akech (2011) regards personalism as a deliberately chosen, institutionally

designed, legally justified strategy pursued by the ruler to maintain control of the state

apparatus and to keep the regime running. Following Schedler (2011), three types of

threats to dictatorial rule can be singled out: lateral, vertical, and external threats. As a

deliberate strategy to deter potential regime opponents, personal rule can be effective at

preventing both lateral (elite coups) and vertical threats (elections, rebellion)

authoritarian rulers face. External threats (sanctions and war) rarely apply to oil-based

autocracies as they usually enjoy support of Western powers interested in securing

stable supply of strategically important energy resources (Bellin 2004).

 

   

15

My primary goal was to explore the effects of oil on the risk and outcome of

regime breakdown and subsequent regime change across authoritarian regime types.

Following Gleditsch and Choung (2004) and Wright et al. (2012), I distinguish between

two types of regime change following the collapse of an authoritarian regime: autocratic

transitions and democratic transitions. Survival probabilities were estimated for each

outcome separately. The analysis of survival probabilities of different types of regimes

with and without oil in a dataset covering all political regimes that existed in the period

between 1950-2010 demonstrates that although oil has a largely positive effect on

authoritarian durability of both party-based and personalist regimes (but not military

regimes), it has a particularly strong negative effect on the democratization chances of

personalist autocracies. In fact, not a single personalist regime that had oil ever

democratized in the last half a century, which suggests that oil tends to impede

democratic transitions in personalist autocracies to a greater extent than in other kinds

of authoritarian regimes. In other words, personalist autocracies that have access to oil

are very unlikely candidates for democratization compared to personalist regimes

without oil and other types of autocracies.

Oil and personalism: Contribution to theory

Previous studies by Smith (2004; 2006; 2007) demonstrated a positive influence of oil

on the stability of regimes, irrespective of the regime type. Smith (2007) showed that oil

makes regimes more, not less, durable. His findings challenge the “weak state”

argument of the rentier state theory maintaining that through various perverse effects oil

rents produce “weak states” that lack capacity to withstand fiscal crises. The “weak

state” thesis (Karl 1997) argued that because of their shallow institutions oil-based

regimes will survive only for as long as they can enjoy the continuing supply of

revenues; in times of boom and bust crises, petro-states were expected to fall.

A study by Wright (2008) found that countries with larger oil reserves are more

likely to be personalist autocracies which implies that “if natural resource dependence

impedes democratization [as the “political resource curse” theory argues], then this may

be because natural resource dependence breeds personalist authoritarian rule, but not

necessarily other forms of authoritarian rule” (Wright 2008, 325).

Smith (2007) linked the durability of oil regimes to the strength of dominant

parties. The oil-producing regimes with strong governing parties include such cases as

 

   

16

Angola, Malaysia, Mexico, and Tunisia. In most of these cases, however, ruling parties

were established before oil and often in the environments of high levels of societal

opposition to the governing elites (Dunning 2005; Smith 2007). Revolutionary regimes

and regimes emerging out of violent struggles tend to have strong parties and are

notorious for their remarkable stability (Huntington 1970; Levitsky and Way 2013).

None of the oil-rich personalist regimes transformed into an institutionalized party-

based regime after the oil boom which suggests that if a regime never built a strong

political party before oil it never created one after the arrival of oil revenues.

By contrast, some oil-producing regimes that initially were based on

institutionalized form authoritarian rule (a strong hegemonic party or the military) were

later transformed into a more personalistic regime. Apart from the example of Saddam’s

consolidation of power during the oil boom in the late 1970s discussed above,

additional examples include Cameroon after Ahidjo handed power over to Biya in 1982

and Congo-Brazzaville after Sassou Nguesso’s comeback to power in 1997. In

Cameroon, analyzed in detail in Chapter 5, Paul Biya asserted rule and weakened the

power of the ruling party Cameroon National Union in 1982 and this maximization and

centralization of power in the executive was assisted considerably by the revenues from

the oil boom from the late 1970s to mid-1980s. In the Republic of Congo, Sassou

Nguesso’s return to power in 1997 marked the end of the country’s short-lived

democratic government. A single party-based regime dominated by the Congolese

Workers Party (PCT) in tandem with the military was replaced with a new regime based

on Sassou Nguesso’s personal domination. Angola seems to have been following in the

same direction as President Dos Santos has been consolidating power in his own hands

since at least the late 1980s in the environment in which it became increasingly difficult

for the ruling MPLA to retain Marxist-Leninist ideology (Hodges 2004; de Morais

2011) although this subtle change has so far been limited to the leadership level. As

these examples suggest, oil windfalls tended to promote the personalization of

authoritarian rule in a number of cases.

Yet, despite the tendencies described above, the relationship between oil and

personal rule has been neglected by scholars of the resource curse. Explanations for the

viability of personal rule in oil-exporting states rarely go beyond simplistic accounts in

which personal rule or neopatrimonialism is presented as a temporary and amorphous

form of rule (typically used as synonymous with “state weakness”) without viable basis

 

   

17

for survival. While personalist regimes that lacked access to oil wealth could be

described as prone to instability, this does not apply to their counterparts “blessed” with

oil. Many oil-producing personalist regimes, such as Iraq, Libya, and Cameroon,

survived the fiscal crises of the 1980s and other “bad times” and successfully resisted

democratization without falling victim to crashing oil prices. Gadhafi’s regime

collapsed in 2011 only after the military intervention by NATO. It seems unlikely that

the Gadhafi regime would have survived without NATO’s intervention “as the military

capabilities of the opposition were too weak to prevail against the forces of the regime”

(Beck and Hüser 2012, 14).

Ruling parties, often conceived as the primary tools of maintaining stability, are

not the only institutions that can link resource rents and authoritarian survival.

Centralized executives, neopatrimonial state bureaucracies and patronage networks can

also foster authoritarian persistence and make democratic reform especially difficult.

Oil revenues can be used to centralize even more power in the executive and remove

constraints that previously tied hands of the chief executive. They provide the resources

needed for maintaining the neopatrimonial apparatus by creating more opportunities,

such as public sector jobs, contracts, subsidies for friends, family members and cronies.

In this way, oil revenues help to “feed” the patronage network. By helping to sustain

and perpetuate all these tendencies, oil rents make mounting opposition from within the

regime and from society especially difficult. It can therefor be argued that the

democratization blockage in personalist autocracies can be explained by the symbiotic

link (or “elective affinity”) between oil and personalism.

As other authoritarian regimes with lots of oil, personalist autocracies can use oil

rents to “translate money into power”, namely buy loyalty of their supporters (Wintrobe

1998), intra-elite oppositionists, and potential rebels. As Fjelde (2009, 200) noted:

“oil wealth provides the economic base for a personal rule where elites attract political loyalty through the use of private economic inducements. Strategies of ‘sharing the spoils’ from the oil through off-budget and selective accommodation of private interests are likely to reduce the economic incentives to displace the government among would-be rebels”.

With a few notable exceptions (e.g. Smith 2005, 2007; Gandhi and Przeworski 2006),

the insights from the resource curse research and institutional perspectives on

 

   

18

authoritarian regimes have seldom been synthesized to examine the influence of oil on

regime outcomes of interest. In this study, I integrated the insights from the institutional

and political economy perspectives to study the role and influence of (authoritarian)

political institutions in the political resource curse.

Research on the political dimension of natural resources has largely overlooked

theoretical and empirical work on the “new institutionalism of authoritarianism”. First,

scholars of the resource curse expect the effects of oil rents on authoritarian survival to

be similar across regime types. Second, they ignore the extent to which the type of

authoritarianism affects which paths of regime transitions are available. The theoretical

model I develop in this study (Figure 0.1) incorporates the insights from both

perspectives. This study aims to examine the implications of this alternative theoretical

model. More specifically, drawing on the analytical approach developed by Geddes

(1999) as well as the new institutionalism of authoritarianism, I derived several

hypotheses about possible causal connections between oil and the type of

authoritarianism and their possible effects on the two outcomes of interest: authoritarian

failure and democratic transitions.

The plan of the Thesis

The study is divided into an introduction, two parts, and a conclusion. Part I reviews the

literature and presents empirical analysis of data on regime changes. Reviews of

literature on authoritarianism and the resource curse serves two purposes. On the one

had, it aims to use this literature review to develop hypotheses about the possible links

between oil and personalist and other types of authoritarian rule. On the other hand, the

purpose is to try to bridge the gap between the two research strands. The analysis

provides descriptive statistics and estimates survival probabilities to assess the effects of

oil on the regime durability and democratic transitions across different types of

authoritarianism. Part II consists of three case studies chosen to illustrate the

relationship between oil, personalism and regime outcomes. Each case provides a

detailed background to the domestic politics of each country, focusing on the processes

of executive power concentration, presidents’ personal control of national oil companies

and oil funds, and the use of oil revenues for often short-term political purposes.

 

   

19

Figure 0.1. Theoretical model: Oil, authoritarian structure and regime outcomes

Source: author

Each case also looks at the changes in the oil production and income levels, how

these changes affect personalist tendencies in the respective regimes and their

implications for regime developments. The conclusion summarizes the findings and

reflects on broader implications for theory development and future research.

Institutional composition of authoritarianism

(military, single party, personal, monarchy)

Oil wealth

Authoritarian durability

Democratic transition

 

   

20

Chapter 1. Excursus on Authoritarianism

1.1. Authoritarian differences There is a long tradition of scholarship on nondemocratic regimes spanning from classic

works by Arendt 1973 [1951], and Friedrich and Brzezinski (1956) on totalitarianism to

a more recent generation of research (see Brooker 2000, 2008; Ezrow and Frantz 2011)

(see Table 1.1). From empires and kingdoms of the past to dictatorships of today,

human history is a history of authoritarian regimes. By the onset of the third wave of

democratization (Huntington 1991) in 1974, there were only thirty-nine democracies in

the world constituting 27 percent of all independent states (Diamond 1999, 24). By the

late 1990s, 85 authoritarian regimes fell (Geddes 1999, 115) and about 117 states were

democracies (Diamond 1999, 24-25). Democracies represented 60 percent of all

sovereign states of the world. In the year 2011, the total number of electoral

democracies remained unchanged (Freedom House 2012). Therefore, about 40 percent

of all countries today are autocracies and taking into account the population size of

China and Russia, two “authoritarian great powers” (Gat 2007), the vast majority of

people today live under authoritarian rule of some kind.

Despite the unprecedented expansion of democracy in the last quarter of the

twentieth century, some regimes such as those in China, North Korea, Saudi Arabia and

Morocco have been remarkably stable. In the Chinese case, Nathan (2003) notes that

“authoritarian resilience” is linked to higher levels of political institutionalization

achieved by the Chinese Communist Party. Other authoritarian regimes proved to be

less resilient. Many of those that collapsed did not transit to democracy. In fact, thirty-

four regime transitions during the so-called third wave resulted in the replacement of

old authoritarian regimes with new ones (Geddes 1999, 116). Other authoritarian

regimes opened up but later relapsed to authoritarianism. In post-Soviet countries, the

demise of the Soviet Union in 1991 triggered political liberalization in the new states. In

most of them, however, old communist regimes were replaced by various forms of

(electoral) authoritarian regimes (Ekiert et al. 2007). In Sub-Saharan Africa, most states

introduced some form of competitive elections, but in fact only a handful of Africa’s

“multiparty electoral regimes” evolved into stable liberal democracies (Bratton and van

de Walle 1997; Van de Walle 2002) while the majority of competitive regimes have

dominant party systems (Bogaards 2004).

 

   

21

Considering historical developments outlined above, since the early 2000s

researchers have begun to talk about the end of the third wave of democratization and

the onset of worldwide democratic stagnation. Carothers (2002) famously proclaimed

the end of the “transition paradigm” that was supposed to explain the processes and

outcomes of third wave transitions. Since the new regimes did not seem to fit standard

typologies of political regimes, new regime categories and conceptual inventories were

created, and scholars have been encouraged to study these new forms of regimes as

“hybrid” or “semi-authoritarian” regimes (Diamond 2002; Ottaway 2003). Recently,

Diamond (2008) warned that a new wave of democratic recession has given rise to

predatory states. In its annual report, Freedom House (2010) noted that the previous few

years represented one of the longest uninterrupted periods of democratic deterioration.

The Economist Intelligence Unit’s 2010 (a) Democracy Index appeared with the telling

subtitle “Democracy in Retreat” (for less pessimistic views, see Carothers 2009, Merkel

2010). While a large protest in December 2010 in Tunisia sparked a wave of uprisings

across the Arab world ousting the long-surviving autocratic rulers in Egypt, Libya and

Yemen, the outcomes of these protests remain uncertain.

In reaction to the putative global democratic recession and authoritarian

resilience, the problem of authoritarianism has received the renewed attention by

scholars of political regimes (Ezrow and Frantz 2011). Some of the questions being

raised include the following: What can explain the resilience of some authoritarian

regimes in the current era of democracy? Why are some authoritarian regimes robust

and durable while others are fragile and short-lived?

Having lived through and personally experienced the regime of Franco in Spain,

Linz noticed the stark contrast between the Franco regime and the totalitarian model

prevailing at that time. Based on this observation, Linz (1964; 1975; 2000) introduced a

distinction between totalitarian and authoritarian regimes and argued that many modern

nondemocratic regimes could be better described as authoritarian. He defined an

authoritarian regime as a political system with limited pluralism, without an elaborate

ideology, without a particular mode of mobilization, in which a leader or a small group

“exercises power within formally ill-defined limits but actually quite predictable ones”

(Linz 1964, 297).  

 

   

22

Table 1.1. Classic and new approaches to the study of authoritarian regimes

Main contribution

Main argument

Classic works

Totalitarianism/ Movement-regimes

Totalitarian regime is a type of a political system characterized by the fusion of an ideologically motivated political party and the state aimed at exercising total control of the society. (Arendt 1973[1951]; Friedrich and Brzezinski 1956; Tucker 1961)

Authoritarianism Authoritarian regimes are a distinctive type of nondemocratic rule based primarily on limited political pluralism. (Linz 1964, 1975, 2000; Purcell 1973; Kirkpatrick 1979)

“One-party systems”

“One-party systems” are the only viable modern form of political systems in which a single party plays a dominant role. (Huntington 1970; Huntington and Moore 1970)

Bureaucratic-authoritarian model

Under certain conditions, delayed industrialization can give rise to an exclusionary authoritarian regime governed by civil and military technocrats seeking to promote industrial development to a higher level. (O’Donnell 1973, 1979; Collier 1980; Remmer and Merx 1982; Bermeo 1995; Munck 1998)

Models of military politics

Officer corps tends to withdraw from politics once they feel that their corporate identity is threatened. (Stepan 1971; Nordlinger 1977; Remmer 1989a)

Variety of nondemocratic regimes

Authoritarian regimes differ along numerous dimensions: totalitarian vs. authoritarian vs. post-totalitarian; institutionalized vs. sultanistic. (Perlmutter 1981; Linz and Stepan 1996; Linz 2000)

Economic models Dictators are rational actors who use repression and distribution as the key mechanisms to regulate elite conflict. (Tullock 1987; Wintrobe 1990, 1998; Olson 1993, 2000)

 

   

23

Note: Author’s compilation

Neopatrimonial / Sultanistic regimes

Regime / state structures can be separated into personal neopatrimonial rule and institutional corporate rule. These differences can explain variation in numerous outcomes, such as authoritarian breakdown, mode and outcome of transitions, vulnerability to revolutions, economic development etc. (Médard 1982; Goldstone 1982; Goodwin and Skocpol 1989; Remmer 1989b; Bratton and van de Walle 1994, 1997; Chehabi and Linz 1998; Goodwin 2001; Erdmann and Engel 2007)

New institutionalism of authoritarianism

Electoral authoritarianism

A major challenge to authoritarian incumbents comes from opposition groups as they struggle for power in the electoral arena under conditions of restricted but meaningful moderate competition (Levitsky and Way 2002, 2010; Schedler 2002, 2006 a/b, 2009; Howard and Roessler 2006; Gandhi and Lust-Okar 2009); elections as a new mode of transition to democracy (Lindberg 2006; 2009).

Coalition models Mixed models

Authoritarian politics are elite politics structured by institutions such as militaries, dominant parties, patronage networks, or royal courts. (Geddes 1999, 2003; Bogaards 2004; Smith 2005; Ulfelder 2005; Gandhi and Przeworski 2006, 2007; Magaloni 2006, 2008; Greene 2007; Brownlee 2007; Hadenius and Teorell 2007; Wright 2008; Svolik 2009; Ezrow and Frantz 2011) Selectorate theories: political survival depends on the ability of leaders to maintain loyalty of members of their coalition (e.g. Roeder 1993; Haggard and Kaufman 1995, 1997; Bueno de Mesquita et al. 2003). In mixed models, access and use of rents can also play a role (e.g. Smith 1995).

 

   

24

Limited pluralism is the key characteristic of authoritarian regimes that sets them apart

from both totalitarian regimes that aim to control public as well as private lives of their

citizens and from democracies in which citizens enjoy unlimited pluralism. Limitations,

according to Linz, can be de facto or de jure, limited to political parties only or

extended to interest groups too. Despite formal legal limitations, under authoritarianism

the existence of independent groups is tolerated and sometimes even encouraged. Some

authoritarian regimes can even institutionalize political participation of a selected

number of interest groups. A good example, cited by Linz, is the PRI in Mexico which

aimed at institutionalizing “a complex pluralism” (Linz 1964, 298). As Purcell (1973,

30) clarified, limited political pluralism implies that the links between interests groups

and the regime put interest groups in a dependent position, in which the leaders of

interests groups “owe their primary allegiance to the regime’s elite and are only

secondarily dependent upon the support of their followers”.

Moreover, authoritarian regimes typically use co-optation of leaders in “a

constant process by which different sectors or institutions become participants in the

system” (Linz 1964, 300). Repression is also used when necessary, but is more limited

than under totalitarianism. In addition, authoritarian regimes are guided by mentalities

rather than ideologies with the key difference being that ideologies are intellectual

systems of thought with utopian vision while mentalities are more emotional than

rational and focus on the past or the present. Another feature of authoritarian regimes is

predictability of leadership. Finally, while authoritarian regimes usually display

intensive political participation at the formative stages of their development, generally

they have low levels of political mobilization.

In his later work, Linz advanced a more nuanced classification of nondemocratic

regime types (see Linz and Stepan 1996; Chehabi and Linz 1998). A new classification

includes four basic categories of nondemocratic rule: totalitarian, post-totalitarian,

authoritarian, and sultanistic regimes. These regimes display differences in the degree of

political pluralism, popular participation, mass mobilization and ideology of political

leaders. The concept of post-totalitarianism was included to capture the change in the

nature of communist regimes, especially the fading role of revolutionary ideology.

Sultanism, another addition to the original classificatory scheme, is a distinctive

type of nondemocratic rule, characterized by arbitrary exercise of authority by a

 

   

25

strongman and his clients, weak ideology and lack of organized participation in power,

and government seeking private goals rather than serving collective interests (Linz

1975, 179).    

Another prominent study of authoritarianism is related to the work of O’Donnell.

O’Donnell (1973; 1979) argued that higher levels of modernization gave rise to

“bureaucratic-authoritarian” systems in some countries of South America, primarily

Argentina and Brazil. This argument challenged the prevailing theory of modernization

which postulated a positive relationship between socio-economic development and

democracy. Bureaucratic authoritarianism is defined as the rule by civilian and military

technocrats who adopt “a self-avowedly technocratic, bureaucratic, nonpersonalistic

approach to policymaking and problem solving” (Collier 1979, 399). Bureaucratic

authoritarian regimes eliminate electoral competition and control popular participation.

Their goal is to promote advanced industrialization (Collier 1979). O’Donnell argued

that these exclusionary military regimes emerged in those countries of South America

where the “deepening” of industrialization required the insulation of state policymaking

from the demands of organized interest groups and therefore measures were taken to

exclude or “de-activate” the popular sectors.

Finally, political economists (Tullock 1987; Wintrobe 1998) developed

economic models of autocracy centered on the interests and calculations of dictators.

These models rest on the basic premise that all dictators are motivated by the same goal:

to hold onto power. But the fact that dictatorial leaders cannot know who supports them

and who does not makes all dictators inherently insecure. Following this logic,

Wintrobe (1990; 1998) showed how autocrats use the combination of repression and

economic redistribution to deal with the problem of insecurity.

To summarize, by elaborating concepts, classifications and models of

authoritarian regimes as well as important insights the classic works have advanced our

understanding of authoritarian polities and politics. These works laid the foundation for

subsequent theorizing about different types of authoritarian regimes.

1.2. “New institutionalism” of authoritarianism Recent work on authoritarian politics has examined how institutional-structural features

that define different kinds of authoritarian regimes shape leader behavior and affect

important political and economic outcomes (Geddes 1999; Ezrow and Frantz 2011). It is

 

   

26

well known that authoritarian regimes rely on different sets of formal and informal

institutions that both constrain and enable the behavior of their leaders. Given the focus

on the institutional foundations of authoritarian regimes, I found it appropriate to use

the term “new institutionalism of authoritarianism” to refer to this body of research.

This term is borrowed from Roeder (1993) who first applied it as a framework for

explaining the collapse of the Soviet Union. Following the established definition of

political institutions as humanly devised constraints that shape human behavior (North

1990) or “constraints on, and opportunities for, individual behavior” (Diermeier and

Krehbiel 2003, 125),7 Roeder (1993) argued that in order to understand authoritarian

politics it was important to take authoritarian institutions seriously. Analysis of

authoritarian rules of the game (or a “constitution”) can help researchers answer

important questions about the locus of state policymaking power, the identity of key

constituencies to which power holders are held accountable (“selectorate”) and the

relationship between power holders and the selectorate. Roeder (1993, 22) maintained

that the new institutionalism “challenges the ways in which we usually analyze

authoritarian politics. It asks us to find the rules that pattern and constrain political

choices. It directs us to identify the political institutions that shape political processes

and the path of political development”.

Schedler (2009) proposes to distinguish between “old” and “new”

institutionalism in the study of authoritarian regimes, but reserves the latter for

“nominally democratic institutions” only. Whereas the “old institutionalism” was

concerned with organizations and strategies of coercion, new institutionalism shifted the

emphasis on institutions typically associated with liberal democracy, such as elections,

courts, parliaments and media (Schedler 2009, 4).

In this study, the term “new institutionalism of authoritarianism” is used to refer

to those studies that analyze authoritarian politics from the institutionalist perspective

(which means accepting the basic analytical position of new institutionalism about the

relevance and influence of not just formal-legal rules but “actual rules in practice”

(Roeder 1993, 9), whether they focus on dominant parties, militaries or nominally

democratic institutions. To be sure, institutions were seen as important in some older

works too (see e.g. studies of one-party states in Huntington and Moore 1970), but                                                                                                                7 On the new institutionalist turn in political science in general, see Hall and Taylor (1996), Immergut (1998), March and Olsen (1984).

 

   

27

recent studies have explicitly emphasized institutional dynamics in different forms of

dictatorship and the roles played by various institutions in the context of

authoritarianism. They argue that political institutions perform important functions for

maintaining authoritarian stability. Political parties, the parliament and other institutions

are seen, each in its own way, as crucial arenas for leaders and their elites to manage

intra-elite conflict and to cement pro-regime coalitions to enhance regime durability.

Recent scholarship (Geddes 1999; Smith 2005; Brownlee 2007; Magaloni 2008)

focuses on differences in institutional forms and power-sharing arrangements and the

consequences of these differences for regime longevity. A large part of this work (e.g.,

Geddes 1999, 2005; Levitsky and Way 2010; for an overview, see Magaloni and

Kricheli 2010) emphasizes the strength of ruling parties which by operating as a

credible power-sharing arrangement and an institutionalized mechanism for managing

internal elite interactions allow single-party regimes to survive for longer periods of

time. Recent works on authoritarian politics demonstrate that institutional-structural

features that define different kinds of authoritarian regimes influence political behavior

(Geddes 1999; Frantz and Ezrow 2011). These studies show that the properties of

authoritarian regimes are consequential for the stability/vulnerability of regimes. In fact,

these works see authoritarian survival as endogenous to the institutional design of

authoritarian rule itself. Geddes (1999) argues that the differences in institutional

characteristics influence the breakdown of authoritarian regimes and the outcomes of

regime transitions in “systematically different ways” (Geddes 1999). Therefore, it is

reasonable to expect that the institutional characteristics that shape leaders’ preferences

can also shed light on the influence of oil on the persistence (breakdown) of

authoritarian regimes and their subsequent democratization.

The diversity of forms of authoritarianism has received an increased attention by

contemporary researchers. The institutional differences that separate one authoritarian

regime from another are seen now as important independent variables that can help

understand and explain the patterns of political behavior as well as a number of political

and economic outcomes (Geddes 1999; Gandhi and Przeworski 2006, 2007; Hadenius

and Teorell 2007; Gandhi 2008; Magaloni 2008; Wright 2008; Ezrow and Frantz 2011).

Within the recent new institutionalist literature, one strand of research has

concentrated on the electoral arena where the authoritarian incumbents and opposition

 

   

28

groups compete for political power. The fate of authoritarian leaders and their regimes

is decided in electoral politics. The focus of this strand of literature has been on the role

of nominally democratic institutions in nondemocratic settings and is associated with

the concept of “electoral authoritarianism” and, together with research on “defective

democracy” (Merkel 2004), is often included in the study of so called “hybrid regimes”

(see Diamond 2002; Bogaards 2009). Electoral authoritarianism is seen as a peculiar

phenomenon of the third wave of democratization. Scholars of “electoral

authoritarianism” (Schedler 2006 a/b) have argued that after the end of the Cold War

many authoritarian leaders adopted various institutions of modern democracy but

essentially manipulated electoral competition to their own advantage. Within this

literature a new concept of “competitive authoritarianism” has been introduced to

designate a new modal type of political regimes that boast meaningful electoral

competitiveness, yet refuse to provide a level playing field for regime competitors

(Levitsky and Way 2002; 2010).

Another strand of research has focused on elite-level politics and coalitions.

Bueno de Mesquita et al. (2003), for example, advanced the selectorate theory where

“selectorate” is defined as a subset of society upon whose support a dictator is

dependent while his survival depends on a subset of the selectorate named the “winning

coalition”. If the dictator adopts policies diverting resources from this support group he

would face threats of being removed from office. The most influential work in this

tradition is Geddes’ study of authoritarian regimes.

Geddes’ (1999; 2003) categorization of authoritarian regimes synthesizes a

number of theoretical contributions from previous research on different forms of

authoritarian polities. Geddes considers the most important differences among

authoritarian regimes to be qualitative. Authoritarian regimes are classified as

personalist, military, single-party, or hybrids of the pure types. Geddes’ main argument

is that different forms of authoritarian regimes collapse in characteristically different

ways. The reason why this happens is that different structural and institutional

characteristics induce different interests and motivations for political leaders with

regard to maintaining power. This includes the organization of intra-elite relationships,

selection of leaders and succession procedures, links with society and opposition and

other institutional differences. These differences have important implications for the

 

   

29

ways in which authoritarian regimes break down and their chances to be replaced by a

democracy (Geddes 2003, 48).

In military regimes, military officers decide who will rule and affect policy

making (as in Brazil, 1964-85). In personalist regimes, an individual ruler is

unconstrained in controlling access to office and policy making. A leader may be a

military person or may have created a party to support himself, but the military or the

party does not have an independent authority (as in Uganda under Idi Amin, 1971-79).

In single-party regimes, including both one-party regimes and hegemonic party

regimes, one party dominates access to offices and control over policy (as in today’s

China). Sartori (1976) distinguished between ‘one-party states’, where only one party

exists and outlaws other parties (e.g. North Korea), and ‘hegemonic party systems’,

where one party is dominant and “other parties are allowed to exist but as second class,

licensed parties” (Sartori 1976, 230), such as Mexico under PRI (see Bogaards 2000;

Magaloni and Kricheli 2010). Geddes does not make a distinction between the two

types of party dominance. For the sake of consistency and comparability of results, I

retain the original Geddes terminology and use ‘single-party’ or ‘party-based’ to refer to

both types of party dominance in authoritarian settings (see Smith 2005 for a similar

approach).

Geddes’ work has been fruitful and stimulated new research on various aspects

of authoritarianism (see e.g. Peceny et al. 2002; Smith 2005; Ulfelder 2005; Wright

2008; Wright and Escribà-Folch 2012). New typologies try to capture distinctions

between different forms of authoritarian rule, but classic categorical typologies, such as

Geddes’, have several advantages including the simplicity of the coding procedures,

cross-national applicability, and the emphasis on institutional structures (parties,

militaries, and patronage networks) (Ezrow and Frantz 2011, 19). It is especially

suitable for examining the main research question of this study concerning the

vulnerability of different types of authoritarian regimes to the effects of oil. Using this

categorization, it is possible to examine oil’s influence on regime durability and

democratization from the perspective of the preferences of rulers – i.e. “actors or sets of

actors who perform as the chief executives of state institutions” (Levi 1989, 2) –

constrained by their respective institutional environments.

 

   

30

1.3. Classic typology Military regimes emerge as a result of military coups that overthrow civilian

governments. After taking over, military officers occupy governmental positions and

the leadership depends on the support of the officer corps for retaining governmental

power (Nordlinger 1977; Wintrobe 1990, 860). The most robust generalization about

nondemocratic regimes is that military regimes tend to be particularly unstable, short-

lived, and faster to transition to democracy. Typically, they hand power to civilians after

being in office for less than five years (Nordlinger 1977). However, why do military

regimes tend to be so unstable?

Geddes (1999) argues that military regimes contain the seeds of their own

destruction. The military is organized as a corporate hierarchical structure and because

of the corporate cohesiveness of the military the officer corps gives a higher priority to

the survival of the military institution itself. Therefore, if elite factionalism and splits

“threaten military unity and efficacy, most of the officer corps will opt for a return to

the barracks”. When the military decides to withdraw from politics, the military officers

more readily hand over power to a democratically elected government as most officers

can continue their military careers after the installation of a new democratic government

(Geddes 1999, 131).

Another explanation for the instability of military regimes focuses on military

governments’ inherent deficit of political loyalty. Military regimes are “regimes of

exception”, for they “lack both a long-term rationale for remaining in power and the

organizational channels for building stable bases of support” (Haggard and Kaufman

1995, 11). They are often intolerant of political participation. Nordlinger (1977, 58)

states, for example, that “few [military regimes] tempted to build mass parties and

where they have been created they turned out to be ineffectual structures because

genuine participation was not permitted”.

Another explanation links the instability of military regimes to the motivation

that drives the officers to take over political power. According to Wintrobe (1990), the

motive for military intervention relates to the military’s desire to increase state budget

allocation to the army. In his account, the military is modeled as “a budget-maximizing

bureau” pursuing increase in its budget (Wintrobe 1990, 861). Having secured increased

budget for the army, the military hand power over to a civilian regime. A military

 

   

31

government that wishes extend its stay in office for longer time may be incapable of

offering excessive salary increases to its personnel or to restrict funding increases to

certain subgroups within the military. This tends to breed internal discontent which

destroys internal cohesiveness of the military’s organizational structure and “possibly

breed a countercoup.” Such countercoups are quite common among military

governments (Wintrobe 1990, 862).

According to Riggs (1993), powerful public officials would support military

takeover if they feel that their interests are not served by the existing regime. He also

points out that military officers are bureaucrats and as such would support coup plotters

who during times of crisis promise to protect the military officers’ interests as public

employees (Riggs 1993, 200). Riggs suggests that we need to consider military rule as

bureaucratic polities. An inherent limitation of all bureaucratic polities is the lack of any

formula for establishing political legitimacy: “Bureaucracies can be very stable as

instruments of public administration when they are controlled by a legitimizing political

system, but they cannot, by themselves, create stable regimes” (Riggs 1993, 201).

Huntington (1970, 4) considered one-party rule as the only “principal” modern

form of authoritarianism, a product of modernization. The so-called ‘one-party systems’

can be strong or weak. Their strength, in Huntington’s view, derives from “the duration

and intensity of the struggle to acquire power or to consolidate power after taking over

the government” (Huntington 1970, 14). For Huntington (1968), ‘one-party systems’

emerge out of long violent struggles such as revolutions and nationalist movements

(Huntington 1968, 425). Building on this argument, Smith (2005; 2007) shows that

party strength depends on the circumstances in which the ruling party has had to

consolidate its power. Parties that faced significant opposition while struggling for

power are more likely to remain strong after they seized power.

In a similar vein, Levitsky and Way (2013) argue that as a subset of

authoritarian regimes ‘revolutionary regimes’ owe their resilience to the legacies of

violent struggles in which they were engaged in the formative years. Revolutionary

regimes including the regimes in China, Cuba, Iran, Mexico, and the USSR as well as

those which emerged from national-liberation struggles in Angola, Mozambique,

Vietnam, and Zimbabwe are shaped by the powerful forces of revolutionary legacies

and, as such, posses cohesive hegemonic parties and strong coercive apparatuses.

 

   

32

Huntington distinguished between ‘revolutionary one-party systems’ and

‘established one-party systems’. The former, such as those of Nazi Germany and the

Soviet Union under Stalin (called ‘totalitarian’, ‘mobilization’ or ‘movement regimes’

by other authors), were characterized by “social dynamism, autocratic and charismatic

leadership, disciplined party, highly developed ideology, stress on propaganda and mass

mobilization, combined with coercion and terror” (Huntington 1968, 23). ‘Established

one-party systems’, such as those of Spain and Mexico, resemble Linz’s definition of

authoritarianism and are characterized by low mobilization, corporate pluralism,

pragmatic rather than ideological goals, and a party that mainly aggregates and regulates

competing interests but is peripheral to the decision-making process (Huntington 1968,

40-41). ‘Established one-party systems’ emerged “from the process of transformation,

consolidation, and adaptation” of revolutionary one part-systems (Huntington 1968, 40).

This claim echoes Huntington’s earlier work on political institutionalization as

key to maintaining political order. As Huntington pointed out, strong single party rule,

which for him characterized complex societies at higher stages of development, induces

stable political regimes (Huntington 1968; Huntington and Moore 1970). For

Huntington, the ability of governments to provide for societal order and political

stability was a more important measure of political development than whether a regime

was competitive or not. Degree of government was more important than form of

government (Huntington 1968, 1). He considered political institutionalization, defined

as “the process by which organizations and procedures acquire value and stability”

(1968, 12), as the most crucial condition for political stability and, from this point of

view, strong single party rule was seen as effective at ensuring order and political

stability.

1.4. What is personalism? Social scientists believe that the key distinction between autocracies lies between

personal, neopatrimonial dictatorships and more institutional, corporate forms of

authoritarianism (Goodwin and Skocpol 1989; Goodwin 2001). Yet, the meaning of the

term ‘personal rule’ has been mired in terminological controversy (Guliyev 2011).

There is a variety of concepts used by scholars to refer to ‘personal rule’, most

prominent of which are ‘personal rule’ (Jackson and Rosberg 1982, 1984; Sandbrook

1985), ‘neopatrimonial regime’ (Bratton and van de Walle 1994, 1997; Médard 1982;

 

   

33

Remmer 1989a/b; Snyder 1992), ‘prebendalism’ (Joseph 1987), ‘predatory rule’ (Lewis

1996), ‘sultanistic regime’ (Linz and Stepan 1996; Chehabi and Linz 1998; Snyder

1998; Linz 2000), and ‘kleptocracy’ (Andreski 1968; Acemoglu et al. 2004). Despite

terminological differences, these concepts refer to the “same general phenomena under

related theoretical labels” (Bratton and van de Walle 1997, 63) and, according to

Médard, “the theoretical differences [between these concepts] are trivial and mostly

semantic” (quoted in Bratton and van de Walle 1997, 90). For example, the concept of

personalist authoritarian regime is defined by reference to the theoretical material on

neopatrimonial and sultanistic regimes (Geddes 1999, 132-134; Ulfelder 2005, 315).

Some researchers have questioned the usefulness of the concept of personal rule

as employed in regime analysis. A wide variety of terms, definitions and

conceptualizations that exist led some scholars to suggest that the concept

(neopatrimonialism, in this case) is so vague and elusive that it has become a “catch-all

concept” (Theobald 1982, 555; Erdmann and Engel 2007). Some proposed to abandon it

altogether (Hadenius and Teorell 2007; Magaloni 2008; Pitcher et al. 2009). Given the

importance of this concept for the purposes of the present research – such as the

expectation that oil is closely linked to personalism – and its prominence in studies of

so-called ‘weakly institutionalized’ politics in the developing and post-Soviet countries,

it seems necessary to take a closer look at the concept of personal rule.

Modern concepts of personal rule are adaptations of Max Weber’s concept of

patrimonialism (Weber 1978[1922]; Bendix 1962). In Weber’s tripartite typology of

Herrschaft, patrimonialism is a type of traditionalist domination which develops from

patriarchal structure through an extension of the ruling chief’s family household. From

patriarchalism it retains the source of legitimation derived from sacred tradition. The

patrimonial ruler’s exercise of authority is constrained by tradition but is at the same

time arbitrary. In contrast to patriarchal authority, patrimonial authority is maintained

with the help of an administrative staff which, however, preserves in many respects the

mechanics of the patriarchal household administration. Notably, the patrimonial staff is

used for the personal interests of the ruler whom it also owes personal allegiance. An

extremely discretionary variant of patrimonialism is called sultanism. In a nutshell, the

essence of patrimonial domination is in “government as the ruler’s private domain”

(Bendix 1962, 334).

 

   

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The revival of interest in Weber’s concept of patrimonialism is associated with

Roth (1968). Roth argued that beliefs in traditional legitimacy eroded in most places of

the world but certain related “actual operating modes and administrative arrangements”

survived (1968, 195). In view of this change, he differentiated between two types of

patrimonialism: traditionalist and de-traditionalized (personal rulership). Some of the

new states in the developing world were “merely private government” for those who

were powerful enough to run it (Roth 1968, 196).

Related to Roth’s concept of personal rulership is the concept of personal rule

developed by Africanist scholarship, most notably Jackson and Rosberg (1982; 1984).

“Political systems of personal rule” are defined as “institutionless polities” based on

personal relations, coercion and clientelism (Jackson and Rosberg 1982, 8). The authors

note that personal rule is not incompatible with bureaucratization. Thus, creation of

organizations at the lower levels of state (bureaucratization) need not be equated with

the establishment of effective institutions. Institutions are the rules that effectively bind

the behavior of political actors. The bureaucratization at the level of administrative

apparatus together with the accompanying personalization at the level of decision-

making results in the emergence of ‘personal-bureaucratic systems’ in which the

strengthened organizational capacity of the bureaucratic apparatus is used as “an

instrument of the ruler’s will to dominate” (Jackson and Rosberg 1982, 5).

As with personal rule, the concept of neopatrimonialism or ‘Big Man Rule’

(Hyden 2006) was advanced primarily by Africanist specialists (Médard 1982; Bratton

and van de Walle 1997), but has also been applied in other regions including Southeast

Asia and the post-Soviet world, especially the Caucasus and Central Asia (Ishiyama

2002; Bach 2011; Laruelle 2012; Isaacs 2014).

According to Hyden, although personalism and clientelism can be found in all

regions, the phenomenon is particularly prevalent in Africa and “a dominant feature of

politics there” (Hyden 2006, 105). Its basic premise is that patrimonialism is not

incompatible with modern state and Jackson and Rosberg’s view of personal rule as

noninstitutionalized or as the ‘institutional void’ - the term suggested by Schedler

(personal communication, November 2011) – is too extreme. In fact, neopatrimonialism

is a set of informal institutions that are regularized, accepted and practiced. This

informal institutionalization can be seen as a kind of “another institutionalization” to

 

   

35

borrow the term from O’Donnell (1996). Formal rules, elections and public

bureaucracies exist and matter but in the reality of neopatrimonial regime informal rules

and norms take precedence over formal institutions.

Table 1.2. Paradigmatic cases of personal rule

As a conceptual construct, neopatrimonialism is a mixture of the traditional and

legal elements of domination (Erdmann and Engel 2007). Personal arbitrariness and the

conformity with customs are the essential characteristics of traditional domination from

which neopatrimonial rule retains only arbitrariness but not traditionalism (Bendix

1962, 295). Under neopatrimonialism, government continues to be treated by the ruler

as largely a private domain, just like under traditional patrimonialism, but customary

restrictions now become irrelevant. Moreover, the ruler’s personal powers are now

enhanced by his control of administrative and military apparatuses of the modern state

(Remmer 1989b, 165).

Another prominent concept of personal rule is ‘sultanistic regimes’ (Chehabi

and Linz 1998). In the most recent Linzian typology of nondemocratic regimes,

 

   

36

sultanism appears as an extremely arbitrary type of semi-traditional regimes (Linz 2000,

143-57). A typical sultanistic regime is characterized by the fusion of the private and the

public, familial power and dynasticism. No distinction is made between a state career

and personal service to the strongman who rules using “rewards and fear” to enact

compliance and loyalty.

The concept of personal rule is also used as part of classical typologies of

dictatorial regimes. Most prominently, ‘personal dictatorship’ appears in Huntington’s

(1991, 1991-92) typology alongside one-party systems and military regimes. Personalist

dictatorship is defined by Huntington as a regime in which “the individual leader is the

source of authority and that power depends on access to, closeness to, dependence on,

and support from the leader” (Huntington 1991-92, 581). A subset of personalist

dictatorships, called ‘sultanistic’, are characterized by “patronage, nepotism, cronyism,

and corruption” (Huntington 1991-92, 581).

Synthesizing contributions from the early work on personal rule, Geddes defines

‘personalist regime’ as a type of authoritarian regime in which power emanates from the

individual ruler who employs an informal patronage network to distribute material

benefits and provides access to office to his collaborators and supporters in exchange

for loyalty. The ruler also controls the bureaucratic apparatus and military and prevents

their development into strong independent bases of power that might challenge his rule.

In the other two types of authoritarianism, either the military or the party retains

autonomy and has some influence on policy-making and personnel decisions.

Considering the discussion above, personal rule can be defined as a type of authority

structure (i.e. patterns of how state authority is organized and how state power is used

(Kohli 2004, 9)), in which the ruler is an individual leader whose decision-making

power is institutionally unconstrained, who presides over a neopatrimonial public

administration and uses the patron-client network as the principal institutional

mechanism for wielding political power. The historic cases of personalist regimes are

presented in Table 1.2. Let us consider each of these characteristics in detail.

Individual ruler / “power monism”: In systems of personal rule, political power

is concentrated in the hands of single person rather than some collectively-run

institution. Oftentimes the leader organizes a clique to support his rule: “[d]uring and

after a seizure of power, personalist cliques are often formed from the network of

 

   

37

friends, relatives, and allies that surrounds every political leader” (Geddes 1999, 130).

But since a clique’s own survival depends on access to the ruler, cliques do not usually

act as a check on the ruler’s powers.

Furthermore, power monism entails, but is not limited, to the high concentration

of power in the executive. Since the executive can be a collective body, power monism

means specifically that all the decision-making authority resides within an individual,

not a collective executive (such as a political party or “military as an institution”).

Personalized decision-making is, however, not sufficient for a macro-concept of

personal rule. Strictly speaking, it stands for a personal ruler in the narrow sense.

Neopatrimonial administration refers to the condition of subordination of the

state coercive and administrative apparatuses to the individual executive on the basis of

the “loyalty and rewards” principle. It is a distinct type of administration as it combines

certain characteristics of both types of Weber’s original scheme. The ideal-type

bureaucracy is a professional organization characterized by “formal employment,

salary, pension, promotion, specialized training and functional division of labor, well-

defined areas of jurisdiction, documentary procedures, hierarchical sub- and super-

ordination” (Weber 1978[1922], 1393). “Weberian” bureaucracy also preserves a

degree of autonomy and acts as a “corporately coherent entity” (Evans 1989, 567).

Purely patrimonial administration, by contrast, serves as a merely personal

instrument of the ruler (Weber 1978 [1922], 231-232). A patrimonial administrator’s

loyalty to his office is based not on “his impersonal commitment …to impersonal tasks

which define its extent and its content, it is rather a servant’s loyalty based on a strictly

personal relationship to the ruler” (Weber 1978 [1922], 1030-31). A patrimonial

administration is maintained by the ruler’s granting of benefices (for example,

allowances in kind or fees) and fiefs to his staff. The ruler recruits his staff according to

particularistic, rather than merit-based, criteria (for example, family membership,

inheritance rules, personal loyalty) to serve mainly the private ends of his leadership

(Weber 1978[1922], 1031-38; Delany 1962).

The existence of “patrimonial administration” in modern times would be an

anachronism, for most contemporary states are governed with a public administration

which is, at least formally, built on the principles of Weberian legal-rational

bureaucracy (Erdmann and Engel 2007). While patrimonial administrations differ in

 

   

38

their professionalism and infrastructural capacity – some are simply dysfunctional –

conceptually, however, it is not correct to equate inefficiency and dysfunctionality with

patrimonial administration which, in Weber’s account, is simply a certain kind of

administration.

Some scholars (Callaghy 1984, 73-75; Hutchcroft 1991, 416) pointed out that

Weber allowed for a bureaucratic rationalization of patrimonial rulership that did not

undermine its essentially patrimonial character. Indeed, Weber referred to certain

historical mixes of rational and traditional forms of domination as to “patrimonial-

bureaucratic states”. But to avoid any confusion with those historical forms, the term

neopatrimonial administration can be used to refer to an organizationally hybrid

arrangement whereby patrimonial features are built into the formally structured

bureaucratic organization (Clapham 1985, 48-49). Bratton and van de Walle (1997, 62)

describe such constellation in terms of the incorporation of patrimonial logic into

bureaucratic institutions. In fact, patrimonial principles and bureaucratic procedures can

reinforce each other.

At a more disaggregate level, a useful distinction can be made between

bureaucracy’s high-level managers and low-level “implementers”. The ruler of a

neopatrimonial staff maintains personal control of the state apparatus through the

appointment of loyal retainees, which stands for the patronage system (Riggs 1993,

229). This is typically accomplished by providing allies with jobs at the top and high

(managerial) levels of public administration. They, in turn, become “clients” of the ruler

and are personally loyal to him. Whereas the traditional patrimonial apparatus in

Weber’s scheme is a personal administrative staff, a modern neopatrimonial

administration is based on personal (non-ideological) loyalty/dependence and some

form of merit-based personnel recruitment at lower levels of bureaucracy.

The typical patrimonial characteristics that can be found in any contemporary

neopatrimonial administration are personal obedience to the ruler by loyalist office-

retainees, material rewards and radial decision-making by direct orders. Describing

Pinochet’s rule in Chile as a neopatrimonial, rather than bureaucratic authoritarian,

regime Remmer (1989b, 165) especially highlighted radial decision-making and

personal control. Most important, neopatrimonial administration retains

patrimonialism’s private-regardingness: “Organizational ends [of patrimonial

 

   

39

organizations] are predominantly the private, subjective ones of their respective heads,

not public, ‘objective’ ones” (Delany 1962, 466).

Patron-client network: Related to neopatrimonial management is the patron-

client network. As neopatrimonial administration presupposes a loyalist network in

place, the informal institutional channel of patron-client ties is embedded in it. By

appointing retainees to the top administrative-bureaucratic positions, the ruler creates an

informal network whereby he stands as the chief patron. The retainees of high level

constitute the ruler’s immediate circle of “lieutenants and clients” (Jackson and Rosberg

1982, 41). By the same functional logic, the top-level clients use their status and access

to state resources to benefit themselves and distribute the spoils of the office to their

cronies, relatives and friends. This stands for political clientelism, namely a system

“based on an exchange of political support for material benefits between patrons and

clients … [involving] a hierarchical structure where multiple clients are connected to

each patron” (Kurer 1996, 653).

The patron-client network thus created provides the institutional infrastructure of

power which penetrates the state and society (Munck and Snyder 2004; Snyder and

Mahoney 1999). The reach of the patronage network varies and can be highly

consequential for the fate of the regime (Snyder 1992). Surprisingly, however, this

attribute of personal rule is neglected in a recent debate on authoritarian regime types.

For instance, Slater (2003) and Lai and Slater (2006) criticize Geddes’ (1999) typology

of authoritarian regimes for being based solely on the procedures for decisionmaking

and the composition of ruling coalitions. Drawing on Mann’s (1984) framework, Slater

(2003) proposes a two-dimensional typology with variation along both despotic power

(personalized vs. collective) and infrastructural power (party or military). The personal

type is excluded for allegedly lacking its own institution to enact decisions despite the

fact that even “primitive” chiefdoms are defined as polities with “institutional

governance” (Earle 1997, 14). However, by concentrating narrowly on regime

institutions, the author overlooks the possibility of the patronage network acting as a

functional equivalent.

Ezrow and Frantz (2011), too, present personalist regimes as a residual category.

However, the discussion above suggests that the patron-client network can be seen as an

[informal] organizational equivalent that distinguishes “personal rule” from other

 

   

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authoritarian regimes, although to some extent patronage may be used in party-based

and military regimes as well. The differences between governance structures seem to be

qualitative as regimes also vary in the extent to which leaders rely on a dominant party

(see, e.g. Reuter and Remington 2009).

Personal rule may be further classified into common, decentralized, and highly

centralized. The common type includes all the features of personal rule but may develop

in two possible directions: toward a more dispersed clientelism or toward greater

centralization. These trends are known in the literature as prebendalism and

neosultanism, respectively.

Lewis (1996, 80) defines prebendalism as a “decentralized [neo]patrimonial

rule” (also see Joseph 1987, 63-68.). On the opposite side, a neosultanistic subtype of

personalist authority structure is “a highly centralized variant of personal governance

under which the ruler has maximum discretion” (Roth 1968, 203). Chehabi and Linz

(1998, 9-10) mention that the difference between neopatrimonialism and neosultanism

lies not only in the degree of arbitrariness but also in the size of the regime’s clientele.

As this feature is difficult to measure directly, the narrowness of the patronage network

(or “the circle of clients”) can serve as an additional qualitative indicator to distinguish

between subtypes of personal authority structures.

In sum, personal rule is defined here as a viable institutional arrangement of

authority and as a strategy of maintaining power. In contrast to some recent studies, I

have also emphasized the viability of personal rule as a separate category, characterized

by highly centralized control over decision-making, neopatrimonial state administration

(a mix of patrimonial and legal bureaucratic features) and the use of patronage network

as the main instrument for wielding power. The patron-client network is the central

institutional mechanism in regimes based on personal rule.

 

   

41

Chapter 2: The Curse of Petroleum Wealth

2.1. Introduction

Over the past two decades, many studies have focused on the economic and political

effects of natural resources, notably oil and gas, on a number of important political and

economic outcomes such as slower economic growth rates, autocracy and civil war (for

a review, see Ross 2014). Terms such as the “Dutch Disease” (The Economist 1977),

the “paradox of plenty” (Karl 1997, 1999), the “natural resource trap” (Collier 2007)

and the “resource curse” are often used by researchers to describe the negative effects of

natural resources.

This chapter provides a theoretical background to the “resource curse” literature

concentrating on the political effects. I divide research on the political dimension of the

“oil curse” into three main groups. Earlier research within the “resource curse” literature

was associated with the rentier state theory; recent studies stress the importance of

contextual variables and policy choices in conditioning the effects of oil wealth on the

political regime and regime stability.

2.2. Economic effects

Initial empirical research on the resource curse was concerned with the economics of

natural resources, focusing on why states with abundant natural resources performed

worse than their resource-poor counterparts (see inter alia, Gelb and Associates 1988;

Sachs and Warner 1995, 2001; Auty 2001; Humphreys et al. 2007). Gelb and his

colleagues argue that the culprit was oil price volatility. Sachs and Warner (1995)

explored the relationship between natural resources and economic growth in a cross-

national regression model. They found a statistically significant negative association

between natural resource wealth, measured as a share of natural resource exports in

GDP (‘resource intensity’), and economic growth for the period 1970-1989. Economists

proposed three explanations for the adverse effects of natural resource wealth on

economic performance: the “Dutch disease”, waste and corruption, and the “voracity

effect”. Scholars such as Corden (1984) proposed the first economic mechanism called

the “Dutch disease”. The term “Dutch disease” refers to the harmful effects of natural

gas discoveries in the Groningen fields in the 1960s on the Dutch manufacturing sector

during the 1970s (Corden 1984; Davis 1995). The booming natural resource sector in

 

   

42

this account leads to the influx of foreign exchange into the domestic economy. This

causes the appreciation of the real exchange rate. Currency appreciation raises the cost

of exports of products from domestic (traded) manufacturing and other industries

producing the “crowding out” effect. As a consequence, export-oriented manufacturing

and agricultural sectors become less competitive, which results in the deindustrialization

of the economy in the mid term (Davis 1995).

Lane and Tornell (1996) advanced the second mechanism, which they called the

“voracity effect”. They argued that in countries with weak institutions, strong organized

groups and weak institutional barriers to discretionary fiscal redistribution, windfall

revenues fuel redistribution as powerful groups compete for access to discretionary

transfers from the government. The upsurge in redistributional competition reduces the

return to investment and, as a result, the aggregate growth rate declines. The authors

showed that, during the oil booms of the 1970s, Venezuela, Nigeria and Trinidad and

Tobago each experienced an increase in the distributive pressures exerted by powerful

interest groups. This manifested itself in increased activity of interest groups competing

to obtain a share of oil rents in the form of government transfers, which had a negative

effect on the overall economic performance. In Nigeria, the distribution of public

investment projects to major ethno-federal factions took such an extreme form of

corruption that one commentator described the situation as “mutual looting – the

political economy of state robbery” (Madanagu cited in Lane and Tornell 1996, 217).

Evidence of the confluence of oil and corruption from Nigeria’s oil boom was

used by Sala-i-Martin and Subramanian (2003) to elaborate the third mechanism linking

natural resources to poor economic performance – wasteful expenditure and corruption.

Data on the macroeconomic development revealed that despite the fact that from 1965

to 2000 Nigeria’s oil revenues reached a total of about US$ 350 billion, per capita GDP

in 2000 remained at the level of 1965 (US$ 245 and 325 respectively). It means that

over a period of 35 years oil revenues did not contribute to the improvement of living

standards of Nigerians. The statistical analysis conducted by the authors found that

resource rents had a strong negative effect on the institutional quality (such as the rule

of law and government accountability). The case study of Nigeria suggested that poor

institutions invited wasteful spending and corruption that were responsible for the

country’s dismal long-term performance. Research shows that indeed natural resources

 

   

43

may foster corruption in developing countries (Busse and Gröning 2011). It seems

plausible that certain features of the oil industry make oil-dependent developing states

particularly susceptible to corruption (McPherson and MacSearraigh 2007).

While economists were exploring the economic effects of natural resources,

political scientists were raising questions about the political implications of oil rents.

Why did the governments of oil states often fail to adopt good policies? What were the

causes and effects of massive rent-seeking in the wake of the oil booms? Did oil rents

affect political institutions and, if so, how? What were oil’s effects on the political

regimes of the oil exporters? A vigorous strand of political science research emerged to

address these and related questions (for reviews, see Ross 1999; Cooley 2001; Rosser

2006; Dunning 2009; Heinrich 2011).

The development of the strand of political research on the “resource curse” can

be divided into three periods or waves. The first wave is a series of monographic studies

that championed the influential “rentier state” thesis; the second wave consists of

correlational analyses; and the third wave – revisionist studies advancing conditional

theories. Table 2.1 below presents a summary of the main arguments and their

representative authors.

2.3. First generation: The rentier state theory The first wave, from the late 1980s through the 1990s, consists of individual country

studies that advance some version of the rentier state thesis (Anderson 1987; Beblawi

and Luciani 1987; Chaudhry 1989, 1994, 1997; Crystal 1990; Ismael 1993; Gause 1994;

Yates 1996; Karl 1997; Vandewalle 1998). The central claim of the rentier state

research is that the impact of oil is homogenous: oil windfalls produce rentier states in

countries with otherwise different characteristics. These scholars argue that large oil

windfalls distort states institutions producing fiscally autonomous, functionally

distributive states with weak bureaucratic capacity.

The concept of the “rentier state” was advanced in the 1970s to highlight the

changing character of the state in the Middle East. Two processes are believed to be key

– the way the state collects revenues and the way it spends it. According to H. Mahdavy

(1970), rentier states are “those countries that receive on a regular basis substantial

amounts of external rents” (Mahdavy 1970, 428) and “only few are engaged in the

generation of this rent (wealth), the majority being only involved in the distribution or

 

   

44

utilization of it” (Beblawi 1987, 51). “Rentier states live largely off unearned income:

the state is resourced with little organizational or political effort on the part of the state

apparatus, and especially little such effort in relation to their domestic populations”

(Moore 2004, 304).

The externality of the major source of state revenue is thought to have two

important political consequences. First, oil revenues bypass the domestic private sector

and accrue directly to the state’s coffers, thus concentrating wealth in the state sector.

The state becomes a dominant economic actor in the domestic economy. Second, oil

rents relieve the government from the need to levy taxes from the domestic population.

In consequence, the state grows into a large, fiscally autonomous organization whose

main activity is concentrated on the distribution or allocation of accumulated wealth.

This distinct way of deriving national income, rentier theory scholars argues, was a

disincentive for Arab leaders to create and develop bureaucratic structures of the

modern statehood. For example, Chaudhry (1989) observed that increased oil revenues

led to the dismantling of the extractive institutions in Saudi Arabia.

With rents accruing directly to the government coffers, the state turns into a key

player in the domestic economy and the source of accumulated wealth. Distributing or

allocating wealth becomes the primary activity of rentier states distinguishing them

(“allocation states”) from “production states” (Luciani 1987). For Delacroix (1980), for

example, Kuwait (and to a lesser extent other Gulf states) represented an ideal

distributive state in which “the bulk of the internal activities of the state are concerned

with distribution. [In Kuwait] this takes the form of all-pervading welfarism, accounting

for 20 percent of all government expenditures. Water, electricity and essential

foodstuffs are subsidized” (Delacroix 1980, 12).

The experience of rentier states was compared with the process of state-building

in early modern European states. The thesis that the source of government revenue may

have an influence on important political outcomes has a rich lineage in fiscal sociology.

As an analytical approach, the “fiscal sociology paradigm” was applied in recent studies

of politics and state-formation in the developing world (for an insightful discussion, see

Moore 2004; for recent applications, see Bräutigam et al. 2008). An influential research

on early modern early Europe ascribed a central role to taxation in the formation of

states and the evolution of representative government in Western Europe. Fiscal

 

   

45

sociology is associated with the names of Joseph Schumpeter, Michael Mann, Charles

Tilly, and more recently, Douglass North and Barry Weingast (see e.g. North and

Weingast 1989; for an excellent discussion of this literature and the empirical test of the

link between taxation and democracy, see Vandewalle 1998; Ross 2004b). According to

these scholars, in early modern Europe state apparatuses evolved out of the rulers’ need

to maintain strong armies (which in turn was motivated by geopolitical considerations

of survival). Monarchs of England, France and other European countries faced the

imperative to support growing armies for which the only source was income collected

as taxes. Extraction of taxes required that the rulers put in place state institutions

capable of collecting information about the population and extracting resources

effectively. Thus, state-building went hand in hand with the growth, expansion and

sophistication of fiscal institutions. In English history, the Crown’s need for revenues

and dependence on taxes led to a situation in which private capital interests were able

gradually to increase their bargaining power vis-à-vis the Crown, leading to the

strengthening of the institution of Parliament (North and Weingast 1989). Eventually,

this led to the establishment of representative government in England and elsewhere in

Western Europe.

According to rentier state theorists, the Middle Eastern oil states had a different

experience. Here the initial stage of state formation was accompanied with the influx of

resource rents. Unlike the process of extracting taxes, which requires having efficient

institutional mechanisms in place, rents were generated outside the domestic economy

and accrued directly to state coffers. Theories of rentier state contend that this

qualitatively different process of raising government finance had important and long-

lasting implications not only for institutional capacities of the states but also for the

prospects of democratization. Given a completely different fiscal mechanism in

operation, the states in Iran and the Gulf region became autonomous and insulated from

their populations. As a consequence, institutions of representative government did not

evolve.

The rentier state theory has for a long time been a dominant explanation for the

exceptional lack of democratization in the Arab Middle East (for useful discussions, see

Anderson 2006; Lust 2011). “In countries like Kuwait and Libya, the state may be

virtually completely autonomous from its society,” wrote Anderson, “winning popular

 

   

46

acquiescence through distribution rather than support through taxation and

representation” (1987, 10). The rentier state thesis was popularized by Huntington

(1991) in the form of a more general statement about the relationship between taxation

and representation. Oil revenues tend to empower the bureaucracy by alleviating the

need to collect taxes, and lower taxation reduced the society’s demand for

representation and the need to keep their government accountable.

Outside Middle Eastern area studies, the rentier state thesis attracted attention of

comparatively oriented scholars. Karl (1997) used the rentier state model in her study of

Venezuela and other “petro-states”. Yates (1996, 2005) found that in Sub-Saharan

Africa Gabon had all characteristics of a typical rentier state. Some recent works

extended the geographical domain of the rentier state thesis to include present-day

Russia and the Caspian states of the former Soviet Union (see Gawrich et al. 2009;

Gawrich et al. 2011; Kim 2003). Gervasoni (2010) applied the rentier theory to explain

variation in the levels of democracy at the subnational level in Argentina.

In sum, the rentier state theory has been the dominant explanation for why oil

states tend to have authoritarian government and weak states (see, e.g. Anderson 1987;

Beblawi and Luciani 1987; Karl 1997; Yates 1996; for a more critical view of the

concept, see Herb 2005; Richter 2012). It also predicted that oil states would be

politically unstable. Luciani (1994), one of the earlier proponents of the authoritarian

rentier state thesis, developed a theoretical model in which authoritarian viability was

seen as a function of the availability of oil rents: abundant rents perpetuate authoritarian

regimes whereas the fiscal crisis of the state associated with rent scarcity can trigger

authoritarian breakdown and stimulate democratization. Much of the theorizing about

the authoritarian effects of oil is derived from the rentier state thesis. Relieved from the

need to extract taxes from the population, a rentier state enjoys fiscal autonomy from

the domestic economy and societal groups. Fiscal autonomy, in turn, creates

disincentives for state elites to develop extractive institutions which are seen as

important for the development of the state’s bureaucratic capacity. As Karl argued, state

weakness was a natural outcome of resource “plenty” as rentier states were relying on

the “substitution of public spending for statecraft” (Karl 1997, 16).

Scholars of the rentier state theory make two claims with regard to the effects of

commodity (oil) booms and busts. One claim is that instability is highly likely during

 

   

47

the bust period as decline in revenues decreases the ability of regimes to buy off popular

support. The second claim is that boom periods can have destabilizing effect through

the Dutch disease effects. Considering the high degree of fiscal volatility associated

with oil revenues, when international energy prices are favorable to generate sufficient

windfall revenues oil states manage to sustain their “shallow” regime stability; during

the bust cycles, when fiscal revenues are in short supply, rentier states are expected to

break down. An even more pessimistic line within the rentier-state literature holds that

not only busts but also booms can put rentier-based economies under stress. Because

rentier states are so fundamentally fragile, the argument goes, they may collapse even

during “good times” (the collapse of the Pahlavi regime in Iran in 1979 is a

paradigmatic example). In short, the rentier fiscal structure and associated state

weakness increases the level of exposure of oil-dependent regimes to exogenous oil

shocks.

2.4. Second generation: Correlational studies

2.4.1. More oil, less democracy While much of the first generation research was monographic and qualitative, the

second wave comprises statistical analyses of large datasets. Scholars have repeatedly

found that, on average, oil inhibits democracy / democratization. In his study of

determinants of democracy, Barro (1999) shows that oil is correlated negatively with

the level of democracy, suggesting that high economic growth associated with oil

exports “does not have the usual positive linkage with democracy” (Barro 1999: 167).

Ross’ (2001b) article is the most influential work representing the second generation of

large-N studies. Based on the analysis of data covering 133 countries from 1971 to

1997, Ross demonstrates that resource (fuels) dependence has a significant negative

correlation with democracy and that this effect is not limited to any particular region

(such as the Middle East or sub-Saharan Africa). Using improved methods and better

measures of the key variables in another study (2009), Ross finds that “oil wealth

strongly inhibits democratic transitions in authoritarian states, that this pattern is

reasonably robust, and that regardless of any possible countervailing pro-democracy

effects, oil’s net impact on democratic transitions is strongly negative” (Ross 2009, 2).

 

   

48

He also observes that the antidemocratic effects of oil wealth are not uniform: they have

become stronger over time, and Latin America is the only region that was not affected.

Several other studies provide quantitative support for the claim about the inverse

relationship between oil and democracy (De Soysa 2002; Wantchekon 2002; Epstein et

al. 2006; Ulfelder 2007; Gassebner et al. 2009; Goldberg et al. 2008; Jensen and

Wantchekon 2004; Ross 2009; Tsui 2010; Aslaksen 2010). Using a different measure of

oil wealth, Fish (2002) finds that the relationship between oil and democracy is

negative. Jensen and Wantchekon (2004, 836) show that in Sub-Saharan Africa mineral

resources, including oil, had a negative effect on the level of democracy, and that

African countries with higher levels of resource dependence “tended to be more

authoritarian than their less resource dependent counterparts”.

Goldberg and coauthors (2008) test the resource curse hypothesis with data on

the U.S. states between 1929 and 2002 and find resource dependence to be associated

with less electoral competitiveness and increased advantages for the incumbent

governors in resource-rich states. The authors conclude: “oil production does appear to

be undemocratic, if by that one means the opposition is less likely to come to power”

(Goldberg et al. 2008, 506). Tsui (2010) finds that discovering oil resources

significantly decreases a country’s democracy level. Similarly, Ramsay (2011) provides

evidence for the argument that increases in oil income have negative effects on the

political institutions of oil producing countries.

2.4.2. Spurious relationship? Measurement issues There are skeptical views on the resource curse theory (see Gurses 2009; Haber and

Menaldo 2011; Herb 2005; Okruhlik 1999; Oskarsson and Ottosen 2010; Treisman

2010; Wacziarg 2012). The main criticism concerns the problem of omitted variables.

Influential research by political economists such as Acemoglu and collaborators

demonstrates that institutions are shaped by history. Country-specific institutions

inherited from colonial times in turn determine important political and economic

outcomes such as relative economic development (see e.g. Acemoglu et al. 2001).

Looking from this perspective, Haber and Menaldo (2011) argue that the relationship

between oil and regime type might be spurious, that is “any number of factors might

jointly determine [both] resource reliance and authoritarianism”. Given that energy

resources happen to be concentrated in countries with weak state capacity and given that

 

   

49

“countries’ underlying institutions are also correlated with their regime types, it is likely

that inveterately weak state capacity jointly determines authoritarianism and high levels

of resource reliance” (Haber and Menaldo 2011, 2).

Unlike Ross (2001b), who estimates between-county variations in a cross-

section, Haber and Menaldo (2011) use a within-country regression model to capture

changes in resource wealth and political regime over a considerably longer time period.

Their results find no relationship between fiscal reliance and authoritarianism over the

long run. Aslaksen (2010) finds that, contra to Haber and Menaldo’s results, the

relationship between oil and democracy remains negative even when controlling for

country-fixed effects. In response to Haber and Menaldo, Andersen and Ross (2011, 3)

note that Haber and Menaldo’s study has a number of flaws including the implausible

assumption that oil should have affected democratization throughout more than 200

years covered in their study. By replicating the study with some modifications, they find

that oil has strong authoritarian effects only after the 1970s due to a wave of

nationalizations that produced the ‘rentier states’.

The fact that in Latin America oil promoted democracy does not invalidate the

thesis about the authoritarian effects of oil rents though. Dunning (2008) argues that

oil’s effects on regime type are conditional and depend on two other structural factors,

namely, the extent of private inequality and the degree of resource dependence.

Table 2.1. Three generations of political research on the “resource curse”

Resource curse

Main contribution

Dependent variable(s)

Main argument

1st generation

The rentier state theory

State institutions, state capacity, regime (in)stability

Oil rents cause state weakness by undermining fiscal institutions of the state. Oil states operate by distributing wealth not producing it. Populations of oil states are not actively involved in politics since low taxation leads to passive citizenry.

 

   

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Authoritarian rulers maintain stability in two principal ways: by buying off popular support and/or repression. The stability of oil regimes is shallow and depends on the supply of rents. Representative scholars: (Anderson 1987; Beblawi and Luciani 1987; Chaudhry 1989, 1997; Crystal 1990; Gause 1994; Yates 1996; Karl 1997; Vandewalle 1998)

2nd generation

Statistical correlation between oil and political regime

Regime type, democratic transition and democratic consolidation, regime durability, leadership duration

Oil wealth promotes authoritarianism. (Barro 1999; Ross 2001, 2009; De Soysa 2002; Jensen and Wantchekon 2004; Epstein et al. 2006; Ulfelder 2007; Goldberg et al. 2008; Gassebner et al. 2009; Morrison 2009; Aslaksen 2010; Bueno de Mesquita and Smith 2010; Tsui 2010; Ramsay 2011) Regimes with oil are more durable than their oil-poor counterparts (Smith 2006, 2007). Oil promotes regime stability in both democracies and autocracies through lessening tax burden on elites in the former and increased social spending in the latter (Morrison 2009). Oil has a positive effect on leadership duration. (Omgba 2009; Andersen and Aslaksen 2010; Bueno de Mesquita and Smith 2010; Cuaresma et al. 2011).

 

   

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Source: author’s compilation

Under certain conditions and through different causal mechanisms, oil can promote both

democracy and authoritarianism. He argues that resource rents make redistributional

conflict in society less important, especially if the level of social inequality is high (as in

Latin America), which reduces the incentives of elites to block democratization. This

can explain why oil had a positive effect on the political regimes in Latin America.

Researchers use two methods of testing the impact of oil on the dynamic of

regime change. One approach is to estimate how oil predicts change on the “regime

type” measured as a continuous variable (degrees of democracy or degrees of

autocracy). The second approach focuses on the impact of oil on certain stages,

components or aspects of democratization such as transition to democratic rule or

democratic consolidation. Most quantitative studies (e.g. Ross 2001) use the first

approach to estimate an average effect of oil on democracy, a research strategy built on

the continuous concept of political regime and based on the assumption that democracy

3rd generation

Heterogeneous effects of oil (conditional upon other factors)

Regime type, regime stability

Oil can promote both democracy and authoritarianism depending on other structural factors and through different mechanisms (Dunning 2008). Oil’s effect on regime stability depends on the timing of oil boom relative to regime consolidation (Smith 2006, 2007). Oil’s effects on regime stability depend on rulers’ calculus of risks and benefits of diversification (Dunning 2005).

Skeptics No curse Regime type, democratization

There is no relationship between oil and regime type, or the relationship is spurious. (Okruhlik 1999; Herb 2005; Gurses 2009; Oskarsson and Ottosen 2010; Treisman 2010; Haber and Menaldo 2011; Wacziarg 2012).

 

   

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is a matter of degree. Thus, strictly speaking, much of quantitative work on the link

between oil and regime type measures the effect of oil wealth / resource dependence on

the levels of democracy rather than democratization per se. However, as argued by

Sartori (1991) and pointed out by Bogaards (2010, 476), conceiving of democracy as a

matter of degree “not only does away with the notion of a democratic transition, but it

also negates the concept of regime and regime type”.

2.4.3. Effects on democratic transitions / authoritarian survival Scholars of democratization point to three components of democratization: the

liberalization of autocracy, the mode of democratic transition and the consolidation of

democracy (Schneider and Schmitter 2004). Ross’ study does not distinguish between

the components of democratization. The implicit concept of regime change in Ross’

study is a change of scores on the Polity scale, which is a common approach in

quantitative studies of democratization (Bogaards 2010, 477). But, as argued by

Ulfelder (2007), it is important to separate the processes of authoritarian survival from

the processes of democratic consolidation when examining the link between oil and

regime change. Most studies employ statistical models that use a continuous measure of

political regime and are estimated in cross-sectional samples that include all countries at

all levels of democracy. According to Ulfelder, this methodological approach is not

appropriate because the rentier state theory is a thesis about the survival of

authoritarianism not the stability of democracy. In other words, the rentier state thesis is

a claim about the role of oil in preventing democratic change in already authoritarian

regimes such as Saudi Arabia or Angola, not a claim that oil can undermine an

established democratic regime such as Norway’s. He argues that “if we think that

transitions from authoritarian rule to democracy are driven by forces that differ

fundamentally from the ones that affect the vulnerability of democracies to breakdown,

then we can probably obtain better estimates of those effects by developing models that

consider those change processes separately” (Ulfelder 2007, 996).

Anderson and Ross (2011) also admit that the most credible version of the

“political” resource curse thesis is the one that suggests that oil reduces the probability

that authoritarian states will democratize. In short, the key argument concerns the

likelihood of democratic transitions and the stability of authoritarian rule. Oil revenues

create opportunities for the incumbent leaders to perpetuate their regimes’ and own

 

   

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political survival. Using the event-history method, Ulfelder (2007) finds a strong

positive association between oil wealth and authoritarian survival. He concludes that,

ceteris paribus, “autocracies that derive more of their national income from oil, natural

gas, and other mineral resources are substantially less likely to transition to democracy”

(Ulfelder 2007, 1012). Drawing on the material from Middle Eastern studies (e.g.,

Crystal 1990), Wantchekon (2002) suggests that resource wealth contributes to the

consolidation of already established authoritarian governments. Similarly, in the book

called Petrotyranny Bacher (2000, 17) states, “Oil wealth is the biggest single factor

sustaining these tyrannies [dictatorial regimes]” and gives an explanation as to why this

is so: “Oil is critical to the support of dictatorships since it provides the most abundant

form of wealth for a repressive government – income that does not have to be obtained

through taxation” (Bacher 2000, 19).

At the level of leadership, cross-national evidence suggests that chief executives

of oil-exporting states are more likely than those of non-oil states to stay in power. Oil

revenues help nondemocratic leaders survive and lengthen the duration of their

leadership (Omgba 2009; Andersen and Aslaksen 2010; Bueno de Mesquita and Smith

2010; Cuaresma et al. 2011). Bueno de Mesquita and Smith (2010), for instance,

examine how the structure of government finances affects the likelihood of leader

survival. Their analysis demonstrates that small-coalition rulers are more likely to

survive when they have access to “free resources”, such as resource rents or foreign aid.

2.4.4. Link to modernization theory The finding that oil inhibits democratization runs counter to conventional wisdom about

the positive effects of economic development on democratization. It appears that oil-

based economic growth has pro-authoritarian, rather than pro-democratic, effects. A

long and influential tradition in comparative democratic development, known as

modernization theory, has maintained that socioeconomic development causes

democratization. Representative scholars of the modernization school include, among

others, Karl Deutsch, Seymour Martin Lipset, Barrington Moore and, more recently

Ronald Inglehart. The classical statement of the modernization thesis is Lipset (1959)

(for an overview and the latest empirical test of the modernization hypothesis, with

disconfirming results, see Acemoglu et al. 2007). Scholars disagree on the exact nature

of this relationship, but that democracy is more likely in richer countries seems to be a

 

   

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fairly established fact. Przeworski et al. (2000) argue that while there is no connection

between economic growth and the likelihood of democracy, higher income levels are

positively linked to sustainable democracy. Boix and Stokes (2003) find that economic

growth does promote democratic transitions.

The resource curse literature has challenged some of the assumptions

underpinning the modernization paradigm. It highlighted the importance of the source

of state revenues (such as taxes versus rents). The experience of oil-exporting states

suggests that not all sources of economic growth can be good for democracy. As Bueno

de Mesquita and Smith (2010, 949) put it, “the important factor in democratization is

not the wealth of a nation, but rather the source of this wealth” (italics supplied). From

the resource curse perspective, socioeconomic development driven by oil production

does not induce the kinds of societal changes that modernization theory claims should

promote democratic transitions.

2.4.5. Effects on democratic consolidation / democratic survival If resource dependence affects democratic transitions, it may also influence democratic

consolidation, the term used to refer to the process of systemic stabilization by

“securing achieved levels of democratic rule against authoritarian regression” (Schedler

1998, 103). There are two versions of this claim. One line argues that oil contributes to

democratic breakdown of nascent democracies. Another line claims that oil erodes

existing democratic norms and institutions, without necessarily leading to democratic

breakdown. Some studies show that democracies in oil states are more likely than

democracies in other states to fail (Fish and Wittenberg 2009; Jensen and Wantchekon

2004 [based on African data]; Wantchekon 2002). Analyzing the case of Venezuela,

Buxton (1999) argues that oil contributed to the institutional decay and the eventual

“deconsolidation” of democracy in Venezuela in the 1990s.

A softer version of this argument asserts that oil contributes to the erosion of

democratic institutions through rent-seeking and corruption (see Karl and Gary 2004

[on Venezuela]; Fish 2005 [on Russia]). Jensen and Wantchekon (2004) contend that

natural resources make a difference for the propensity of African countries to sustain a

democratic regime. Africa’s resource-rich democracies were more likely than resource-

poor democracies to experience a democratic breakdown. As Jensen and Wantchekon

(2004, 836) noted, “[a]fter the initial wave of democratization, countries with higher

 

   

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levels of natural resource dependence experienced a backslide toward authoritarian

rule”. In a statistical analysis, Fish and Wittenberg (2009) find that fuels dependence is

bad for successful democratization, highlighting the fact that in six out of the 20 cases

of failed democratization (Congo-Brazzaville, Gabon, Kuwait, Nigeria, Russia, and

Venezuela) oil and gas account for more than half of total exports. This allows them to

conclude that “[d]emocracy knows no greater foe than oil” (Fish and Wittenberg 2009,

255). Treisman (2010) finds no significant impact of oil on the democratic erosion in

the case of Russia under Vladimir Putin while Gurses (2011) finds a positive

relationship between oil and democratic consolidation.

Evidence from Latin American countries seems to be mixed which leads

specialists to formulate somewhat contradictory views on the impact of oil on

democratization in that region. For example, Karl argues that oil promoted elite pact-

making in Venezuela. This promoted consensus among key democratic forces and led to

the democratic transition in 1958 (the Pact of Punto Fijo) following the fall of the

dictatorship of Marcos Pérez Jiménez (Karl 1997; also see Karl 1987). However, Karl

also argued oil wealth creates special challenges for democratization in general and that

oil is responsible for the crisis of the Venezuelan democracy. She notes: “In the rare

cases where some type of electoral democracy is actually established, reliance on oil

rents as the chief source of the state’s livelihood is likely to produce defective

democracies like Venezuela’s restricted partiocracy” (Karl 2008, 3).

2.4.6. Effects on regime stability A number of works within the second wave focus on the impact of oil on regime

stability rather than regime type or democratization. Oil is a source of potential

exogenous shocks. Periods of oil booms, as for example in the 1970s, are followed by

periods of oil busts, as in the 1980s. Such fiscal volatility is the source of potential

economic crisis and is believed to affect the stability of regimes of oil exporters. Some

scholars argued that even though oil contributes to regime stability during good times, it

has a destabilizing effect on political regimes during bad times (Karl 1997; Chaudhry

1997). Karl’s study (1997) shows, for example, that oil destabilized (authoritarian)

political regimes in oil-rich countries such as Iran, Algeria, and Nigeria.

Recent studies do not find support for the claim about the uniformly

destabilizing role of oil rents. Smith (2004) investigates regime longevity specifically

 

   

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with respect to oil-induced exogenous shocks. His findings indicate that oil regimes are

more stable than it was previously assumed. In a similar vein, Morrison (2009) finds

that oil rents tend to stabilize regimes, both democracies and autocracies. He argues that

the stabilizing effect is due to two separate mechanisms related to redistributional

conflict in society: in democracies, increase in oil revenues (or any source of nontax

revenues) is linked to less taxation of elites while in authoritarian regimes more windfall

rents allow rulers to increase their social spending.

But what can explain the tendency for oil to promote authoritarian durability?

One view is that as the kind of “manna from heaven” oil rents can be easily used by

leaders to buttress their incumbency advantages (Jensen and Wantchekon 2004). Oil

exports generate valuable fiscal revenues for the state derived externally with little input

from domestic productive activities.

From another perspective, a country’s reliance on oil revenues exposes its

economy to inflationary effects, Dutch disease and external shocks due to oil price

volatility (Gelb 1988). During boom periods, the influx of massive foreign exchange

generates the Dutch disease effects with negative ramifications for the entire economy.

The booming oil sector in this account leads to the influx of foreign exchange into the

domestic economy. This causes the appreciation of the real exchange rate and stimulates

inflationary pressures. Currency appreciation raises the cost of exports of products from

domestic (traded) manufacturing and other industries producing the “crowding out”

effect. As a consequence, export-oriented manufacturing and agricultural sectors

become less competitive (Corden 1984).

Moreover, fluctuations in the world oil price make oil rents a highly volatile

source of fiscal revenue for the state and a cause of economic crisis. As Ahrend (2006,

8) explains, “crises in emerging market economies are most commonly caused by large

terms-of-trade shocks arising from sharp falls in the prices of countries’ main export

commodities”. During bust periods, falling prices lead to fiscal shortage and require

difficult financial adjustments to adopted public expenditure programs. In addition, all

oil exporters also face the challenge of transitioning to alternative, non-resource bases

for economic development (Mitchell and Stevens 2008).

It is the second view that presents something of a puzzle. Inflation, price hikes,

Dutch disease and other problems associated with oil rents are all possible causes of

 

   

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economic crisis (Smith 2007). Studies have shown that he economic crisis is one of the

main predictors of regime change and authoritarian regimes are arguably more

vulnerable than democracies (Gasiorowski 1995; Haggard and Kaufman 1995; Geddes

1999; Bueno de Mesquita et al. 2003).

Yet cross-country evidence suggests the opposite: oil is associated with a

reduced risk of authoritarian breakdown (Smith 2007). In other words, oil tends to

promote authoritarian durability, and volatility seems to have no significant impact.

Contrary to the theoretical prediction of scholars such as Luciani, the economic crises

associated with oil booms and busts in the 1970s and 1980s did not lead to the collapse

of regimes in oil-dependent states.

This is puzzling. As Smith (2007, 36) put it, “the oil-exporting world is home to

some of the most durable autocracies in modern history, and we lack an explanation for

why that is so”. One explanation is that patronage spending and repression are the key

instruments in dictators’ hands (Ross 2001). Oil revenues can be used by rulers to

increase public spending or invested in repressive apparatuses. Increased spending on

patronage and security forces allows authoritarian leaders to dampen societal pressures

on the regime to liberalize. This also provides leaders with enough resources to appease

potential elite opponents. Rulers with access to oil revenue do not depend on the

domestic productive economy, and therefore they are less constrained in restricting the

provision of public goods (such as free media, transparency, and civic liberties) that

enhance the ability of societal groups to coordinate (Bueno de Mesquita and Smith

2010).

A second explanation draws on a (historical) institutionalist perspective that

regimes with stronger political institutions, such as state bureaucratic apparatuses and

dominant parties, are better able to manage and survive economic/political crises. Smith

argues that oil rents can contribute to regime stability even during bad times as rulers

can use oil revenues acquired during boom periods to strengthen the political

institutions and their support coalitions. This helps them survive during bust periods

(Smith 2004). The key explanatory factor is the timing of regime consolidation relative

to the onset of oil boom. In this view, the robustness of regimes is determined by a set

of antecedent historical conditions that influenced the processes of coalition-building

and political institutionalization. Regimes are more robust if at the time of consolidation

 

   

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they did not have access to windfall rents and faced strong organized opposition. During

the booming years these institutionally consolidated regimes reinvested oil resources in

state and party institutionalization. Increased state capacity lowered the exposure of this

group of regimes to exogenous shocks.

A third explanation points to the importance of leader incentives and choices.

The most significant challenge that all resource-dependent states have to address is how

to deal with the volatility in state fiscal revenue. During the boom period, the inflow of

windfall revenue can generate the Dutch disease effects. During the bust period,

revenues decline making the government reduce public spending. Both boom and bust

can potentially cause an economic crisis which in turn may trigger a political crisis.

Diversifying the economy can reduce the exposure of oil states to exogenous shocks,

and it seems rational for leaders to pursue diversification. Diversifying away resource

dependence can also improve the sustainability of economic performance contributing

positively to regime legitimacy. Yet, diversification may be dangerous as it implies that

rulers have to concede economic (and potentially also political) autonomy to non-state,

private elites. Therefore, if regimes are confronted with strong opposition to their rule

and have no viable non-resource sectors, there will be very little incentive for leaders to

diversify the economy (Dunning 2005).

Table 2.2. Oil and regime stability: Summary of causal mechanisms

Mechanism Outcome Author

Weak state

(rentier state)

Fragile authoritarian regime

(= Instability)

Karl 1997

Weak state and shallow ruling party

coalition

(coincides with oil boom)

Instability Smith 2007

More patronage/ social spending

Stable authoritarian regime

(= Stability)

Ross 2001, 2009

More repression

Stability Ross 2001

 

   

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Strong state and ruling party coalition

(before oil)

Stability Smith 2007

(Non)Diversification strategies

(depending on strength of societal

opposition is and presence of alternative

sectors)

Stability/Change Dunning 2005

Source: author’s compilation

In fact, rulers can employ resource non-diversification as a political strategy to thwart

the empowerment of political opposition to their rule. As long as opposition is kept

weak, regimes can endure for long periods of time. In sum, leaders want to promote

economic development (as it raises their economic returns) but they will not adopt

growth-promoting policies it if they feel their incumbency is threatened. As Acemoglu

and Robinson (2006, 115) put it: “political elites will block beneficial economic and

institutional change when they are afraid that these changes will destabilize the existing

system and make it more likely that they will lose political power and future rents”.

Table 2.2 summarizes this discussion about causal links.

2.5. Third generation: Conditional theories

The third wave emerged in reaction to the structural determinism prevailing in the

resource curse literature. Speaking of the determinism, Herb (1999, 257) gives an

example that when it comes to explaining the lack of democracy in the Middle East “oil

is proffered as the culprit, ‘no representation without taxation’ cited as the mechanism,

and the matter is closed.” Recent research emphasizes the importance of other factors

that can mediate the effects of oil. They show that the effects of resource dependence

are heterogeneous and conditional, that is, they vary depending on specific

circumstances, sequencing of processes or country-specific conditions.

Scholars of conditional theories agree that oil has an impact on the political and

economic outcomes. However, they argue that the direction of this impact is conditional

and contingent upon other important factors. They highlight the following variables as

the crucial mediators: the quality of institutions, ownership structure, leader choices,

social inequality, critical junctures and path-dependency, incumbents’ incentives, and

the country context in general.

 

   

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Mehlum and coauthors (2006), for example, argue that the crucial factor is the

quality of institutions. They distinguish between “producer friendly” and “grabber

friendly” institutions with the latter encompassing weak rule of law, malfunctioning

bureaucracy, and corruption. The quality of institutions “determines whether natural

resource abundance is a blessing or a curse” (Mehlum et al. 2006, 1119). Similarly,

Robinson and collaborators (2006) argue that the impact of resource booms depends

critically on the quality of political institutions because the institutions affect the choice

of policies:

“Low quality institutions [based on political clientelism] invite bad policy choices since they allow politicians to engage in inefficient redistribution in order to influence the outcomes of elections. High quality institutions [that promote accountability and bureaucratic competence] make such political strategies infeasible or relatively unattractive” (Robinson et al. 2006, 465). Jones Luong and Weinthal (2006, 2010) contend that the key link between

resources and the negative outcomes is the ownership structure and control over mineral

resources. As they point out, “the negative outcomes widely associated with resource

wealth should instead be attributed to the pathologies associated with state ownership”

(Jones Luong and Weinthal 2006, 246).

Dunning (2005) argues that resource dependence can affect political stability

depending on the leaders’ incentives as they face a tradeoff between diversifying the

economy and the political risks associated with implementing diversification. Oil

wealth presents a peculiar dilemma for autocrats. Oil revenue is a highly unstable

source of fiscal revenue, and leaders would prefer to diversify the economy to reduce

their reliance on such a volatile source of income. The dilemma is, however, that

diversification is politically risky. A diversified economy can create conditions for the

development of alternative sources of power and autonomous elites, who may use their

newly acquired wealth to overthrow the regime (Dunning 2005). The regime of Mobutu

Sese Seko in Zaire illustrates this dilemma quite vividly. Although being aware of the

need and benefits of diversifying the economy, Mobutu was reluctant to carry out

diversification of the Zairian mineral exports-based economy – and even made attempts

to de-diversify it – due to his fears that diversification can augment oppositional

strength to his kleptocratic rule. Thus, to use the famous phrase by Bueno de Mesquito

 

   

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et al. (2003), even though nondiversification seems to be a bad policy, it can be good

politics, at least for some dictators.

Reflecting on the findings of the recent work, which has challenged the

conventional view of the resource curse, and drawing on especially the Latin American

experience, Dunning (2005; 2008; 2009) proposes a conditional theory of the resource

curse to account for “significant heterogeneity in the causal effects of natural resource

endowments in different institutional settings” (2009, 20). He argues that “natural

resource wealth can have both authoritarian and democratic effects: resources have a

conditional impact on the political regime” (2008, 107). In his account, “resource rents

can promote authoritarianism or democracy, but they do so through different

mechanisms” (2008, 4). Whether oil promotes authoritarianism or democracy depends

in large part on the pattern of wealth distribution in a given society. In Latin America,

natural resource wealth helped democracy (Dunning 2008; 2009). Oil’s impact depends

on two other structural factors, namely, the extent of inequality and the degree of

resource dependence. He argues that resource rents make redistributional conflict in

society less important, especially if the level of social inequality is high (as in Latin

America), which reduces the incentives of elites to block democratization.

A theory of regime stability developed by Smith (2007) explains that the effect

of oil wealth on regime stability is heterogeneous: depending on the timing of oil’s

entry into a country’s political economy and the initiation of “late development”, oil

wealth may either weaken or strengthen the state capacity and, as a consequence, either

decrease or increase regime durability. Since oil is “always potentially a sizable political

resource that can be skillfully wielded by politicians”, eventually its effect on regime

longevity depends on how rulers “incorporate it into the domestic political economy”

(Smith 2007, 7). Smith argues that oil rents can contribute to regime stability even in

bad times as rulers can use oil revenues acquired during boom periods to strengthen the

political institutions and their support coalitions, the strategy that helps them survive

during bust periods (Smith 2004). Lowi (2009) argues that leadership choices at critical

junctures – at the inception of oil-based development and during the economic shocks –

are the most significant factor in explaining regime stability: “At those junctures, the

leadership makes momentous decisions about how to distribute resources. In this way, it

(re-)defines the shape of political institutions and impacts outcomes” (Lowi 2009, 15).

 

   

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Basedau (2005), in turn, highlights the importance of the broader, context-

specific variables. In his view, an ideal contextual analysis would take into account such

variables as the general socio-economic and political context, plus the factors relevant

to resource production and revenue management, and the complex interaction of all

these factors. Wright (2008) finds that the source of government revenue affects the

choice of institutions in authoritarian regimes. The sources of “unearned revenue”

induce personal rule, a type of authoritarianism with most challenging environment for

democratization.

Conditional theory considers oil’s effects to vary depending on specific

circumstances, sequencing of processes or country-specific conditions. This approach

strengthens the view that an understanding of the effects of oil rents requires more

attention to the domestic context (Basedau 2005) and elite choices within time- and

country-specific situational constraints.

2.6. Conclusion

In this chapter, I provided an overview of the rentier state and resource curse literatures.

There is by now substantial evidence, both case-study and large-N, that oil promotes

authoritarian rule by impeding democratic transitions and helping authoritarian regime

and their leaders to cling on to power. Although most scholars agree that oil promotes

authoritarianism (under certain conditions), there seems to be little consensus on how

exactly oil is linked to durable authoritarian rule. In the existing research on the political

dimension of the resource curse, there are two fundamental problems impeding our

ability to uncover the causal links between oil and authoritarian durability: the

assumption of unit homogeneity and the expectation of common causal mechanisms.

These problems arise, at least in part, because large-N analyses that dominate much of

the resource curse research and rest on the correlational logic are not concerned with

specifying the causal chain connecting oil to authoritarian rule. The mechanism-based

approach is increasingly being contrasted to the more common variable-oriented

analysis (see, e.g., McAdam et al. 2008).

Unit heterogeneity / homogeneity refers to “whether the same variable has

different effects in different subsets of the data” (Tarrow 2007, 589). Unit homogeneity

is a problem familiar to students of civil war. The first wave of civil war research,

which was based on correlational analyses, assumed that different types of civil war

 

   

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(such as ethnic versus nonethnic) were driven by similar causes. Researchers simply

assumed their unit of analysis, civil war, to be a homogenous category (Sambanis 2001,

2003, 2004). As Sambanis (2004, 260) put it, “It is accepted practice in the literature to

pool events of civil war without exploring whether, in fact, they all result from the same

causal process”.

Like the earlier civil war literature, the current research on oil and authoritarian

rule also suffers from the implicit assumption of unit homogeneity. Most studies

consider the type of pre-existing authoritarian regime to be irrelevant without subjecting

this assumption to empirical verification. There is good theoretical reason, however, to

believe that the type of authoritarian regime might matter. Scholars of authoritarianism

have long argued against the homogenizing understanding of authoritarianism and

argued that different types of authoritarian regimes (differences in their “political

architecture”) have different sources of strengths and vulnerabilities (see e.g. Linz and

Stepan 1996; Bratton and van De Walle 1997; Geddes 1999).8

The assumption about unit homogeneity has implications for the way

researchers approach the specification of the causal mechanisms. The common

expectation is that the causal mechanisms must be similar across types of authoritarian

regimes. However, differences in the mode of authoritarian governance might entail

different causal mechanisms. Therefore, it might be helpful to look more closely at the

institutional setup of pre-existing authoritarian regimes.

There is consensus in the literature that the specification of causal mechanisms

is crucial. As in other studies based on correlational analysis, the causal process in the

political resource curse remains largely the “black box”. It has been recognized that the

resource curse literature has largely failed to specify a set of plausible causal

mechanisms.

The causal mechanisms proposed by various authors can be usefully divided

into two broad categories: demand-side effects and supply-side effects (Ulfelder 2007,

997-998; Karl 2004). Both sets of explanations borrow from the rentier state theory

discussed above. Explanations focusing on the demand side emphasize the way in

which resource-reliant states collect revenues, and how state reliance on unearned

revenues depresses popular pressures for government accountability. Supply-side                                                                                                                8 The term “political architecture” refers to the rules that “determine how the leadership of a state is configured and how state authority is exercised” (MacIntyre 2003, 1).

 

   

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explanations focus on the ways rulers use and allocate resource revenues so that to stifle

opposition and other domestic pressures for democratization. Windfall revenues afford

rulers a variety of possibilities they can use to ensure loyalty and strengthen state

repressive capacity including use of greater patronage spending and increased

expenditures on the security apparatus. Loyalty and repression are the two primary tools

for dictators to maintain power, according to Wintrobe (1990). Because energy is a

strategically important resource, oil-rich rulers also enjoy foreign support (Bellin 2004).

To summarize, oil wealth relieves oil-rich government from the need to tax the

population. Huge oil revenues supply government with the financial and other resources

that can be spent to buy off opponents, ensure loyalty and resist (if needed, by coercion)

calls for democratization. Boix (2003) proposes an alternative causal link: since oil

wealth is an immobile type of assets and cannot be moved abroad wealthy elites will

resist democratization because of the fear to lose their immobile assets. Acemoglu and

Robinson (2006) also suggest that asset (im)mobility can explain why the incumbent

elites of oil-rich states oppose democratization.

However, the rentier state theory and other theories based on the rentier state

model have several shortcomings. Economic determinism is the main limitation. By

casting the relationship between oil and regime type in highly structuralist terms, these

theories fail to account for intermediary processes in the causal explanation. For

example, it is reasonable to ask: How exactly lower taxation translates into less

demands for representation? How do governments of oil states actually buy loyalty?

What kinds of institutions are involved in this process?

The rentier state theory points out several important structural factors, such as

the external source of rents (rather than domestic taxation), government fiscal

autonomy, state ownership of the petroleum industry, and the expenditure of revenues.

However, what is missing from rentier state theory is a description of how these

variables operate within domestic political systems of oil states.

Furthermore, by focusing on the structure of the economy as well as the patterns

of government finances and spending, the political economy framework derived from

the theory of the rentier state prioritizes economic factors in explaining the relationship

between oil and authoritarianism. Therefore, in spite of its name, the political economy

approach has largely ignored the political part (Okruhlik 1999, 286). Evidence from

 

   

65

case studies suggests that in some countries the influx of oil revenues exerts negative

effects on the institutional development of the state by encouraging rent-seeking and

corruption among politicians. However, as several recent works indicate (e.g. Smith

2007), such processes never occur in the political vacuum. Rather, in the path-

dependent way, oil revenues enter different political-economic environments, which by

the time of the arrival of oil windfalls normally have been shaped by other powerful

forces. Therefore, to understand how and why oil promotes authoritarian rule, it is

necessary to consider the role of political contexts by looking at how oil revenues are

filtered through and by the existing domestic political environments (Smith 2007;

Basedau 2005). The task of identifying the causal mechanisms begins with studying

how political institutions interact with oil revenues and how this interaction influences

the relationship between resource dependence and authoritarian persistence. Basedau

(2005), for instance, proposes a useful analytical framework to study the resource curse

which takes into account two kinds of contextual variables: a number of country-

specific socio-economic and political conditions and the characteristics of the resource

industry. Focusing on the political context seems particularly promising.

The identity of authoritarian regimes, with their diverse institutional

configurations and other important characteristics, has been taken for granted. Despite

the growing recognition that the “context matters” (Basedau 2005; Smith 2007), most

studies assume that the regime structure is either neutral or irrelevant for the

authoritarian resource curse. Because of this lack of attention to the variation among

authoritarian systems, the rentier state theory has failed to present a theory of a causal

process linking oil and persistent authoritarian rule.

One way to address the problem of causal mechanisms (the “how” of the

political resource curse) is to examine more carefully the mode of governance in

different authoritarian regimes. Remarkably little research has examined how oil affects

political outcomes across different types of authoritarian regimes.

     

 

   

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Chapter 3. Oil and Personalism: Cross-country Evidence

3.1. Introduction Previous research has shown that differences in authoritarian structure have important

implications for the ways authoritarian regimes break down and the prospects of their

democratization. As discussed above, military regimes have a high frequency of regime

changes and a shorter lifespan than single party and personalist regimes. Personalist

regimes are the second, after single-party, most stable type of authoritarianism (Geddes

1999). Some historical cases of personalism were remarkably durable (Remmer

1989a/b; Snyder 1998, 62-67), the findings that invalidated earlier beliefs in the

inherent instability of personal rule (see, for example, Huntington 1968, 1-24). In

personalist regimes, democratic transition and immediate democratization are typically

difficult to achieve (Snyder 1992; Linz and Stepan 1996; Bratton and van de Walle

1997). In contrast to more corporate and bureaucratized forms of authoritarianism,

neopatrimonial dictatorships tend to be more susceptible to revolutionary and other

violent means of overthrow (Goodwin and Skocpol 1989; Goodwin 2001). Political

openings in personalist regimes are normally driven by popular protest, rather than elite

splits (Bratton and van de Walle 1997). But even after they collapse, neopatrimonial

regimes are most likely to be replaced by other types of nondemocratic rule (Huntington

1991-92; Linz and Stepan 1996). Personalist leaders are highly unlikely to give up

power voluntarily; they have to be forced out of power (Geddes 1999; Huntington

1991). In sultanistic dictatorships, democratic transitions are “complicated by the

weakness of political parties and other institutions” (Huntington 1991, 121).

Alongside the effects on regime change, personal rule is associated with a set of

negative economic outcomes, high levels of corruption, and poor governance (Jackson

and Rosberg 1982; Sandbrook 1985; Chehabi and Linz 1998, 21-23; van de Walle

2001; Chang and Golden 2010).

Scholars believe that different authoritarian systems have distinct functional

logics built into their political architecture as well as their own strategies of maintaining

power and resisting both domestic and external pressures for democratization. This

functional-institutional heterogeneity implies different sets of vulnerabilities for

different kinds of authoritarian regimes. In short, authoritarian survival is endogenous to

the authoritarian regime type. An influential tradition in the study of regime change

 

   

67

takes the kind of prevailing authoritarian regime as the starting point/framework in

explaining success or failure of democratization; the classic exemplars of such work are

Linz and Stepan (1996), Bratton and van de Walle (1997), and Geddes (1999). The idea

that differences in the structure of authoritarian regimes have implications for regime

change (survival) seems relevant for the study of the oil’s effects on regime survival. It

might be that there exist different ways in which authoritarian structure and oil interact

and that the interaction between these two influences regime longevity and

democratization in systematically different way. A corollary of this logical proposition

is that there might be different causal processes and mechanisms that link oil to the

political regime.

To summarize, scholars generally agree that the concept “authoritarian regime”

has become too broad to be analytically useful. Authoritarian regimes differ from each

other in important ways. Their differences include the following basic features: the

identity of rulers; how much decision-making power the ruler has and whether there are

institutions that constrain his authority and behavior; what institutional structures the

ruler relies on in exercising authority and how these institutions structure the

interactions between the ruler and the elites.

3.2. Hypotheses

This study is based on two assumptions. First, leaders of oil states, like those in other

states, are rational actors and as such are power maximizers; they will make choices that

enhance their authority and ensure their incumbency. As Waldner (2003) pointed out,

leaders normally make choices under constraints posed by resource scarcity. For oil

states, however, this is not the case since oil rents “increase choice sets rather than

constraining them: they are permissive variables which make more things possible.

Needed, then, is intense emphasis on decision-making logics and contexts” (Waldner

2003, 8).

What are those decision-making logics and contexts, and how can we identify

them? In answering this question, I present an argument based on the new institutional

approach to authoritarian politics. The new institutionalism of authoritarianism

(Schedler 2009) contends that institutions matter in authoritarian regimes even though

their primary function might be to “preserve the power, prestige, privileges, and

 

   

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importantly, distributional advantage of the dominant elite and its allies at the expense

of society” (Cook 2007, 6).

I show that the authoritarian effects of oil windfalls on a country’s regime

should be seen in the context of the formal and informal institutions that constitute that

country’s authoritarian regime. It is well known that authoritarian regimes rely on

different sets of institutions that both constrain and enable the behavior of their leaders.

In the institutional model of authoritarian decision-making, leaders’ preferences can be

derived from the institutional logics of their regimes. More specifically, the preferences

of leaders of party-based regimes – who must take into account the organizational

interests and preferences of the party – may not be the same as those of leaders of

personalist regimes – whose all-powerful rulers are concerned more about satisfying

much more narrow interests of their own and the small elite they build around them.

Wintrobe (1998, 11) labels such narrow interest-driven regimes the “tinpot” regimes in

which the government uses only moderate repression to stay in power and “collect the

fruits of monopolizing political power (Mercedes Benzes, palaces, Swiss banks

accounts, and so on)”.

Authoritarian institutions structure the behavior of politicians in authoritarian

regimes. The allocation of revenues by the incumbent leader might depend on the rules

of the political game. The structure of authoritarian regime, that is the rules that govern

decision-making and exercise of power, can play a crucial role in the authoritarian

resource curse. Is the ruler a single veto player or are there other important

actors/institutions whose agreement or support is required for a policy to be adopted?

Who is the ruler – one person, the political party, the military or the royal family? Who

carries out policies – the party organs, the state bureaucracy, or the neopatrimonial

apparatus (permeated by the ruler’s patronage network)?

Oil rents are a stock of resources and as such cannot exert any effects

independent of actors. It is the leaders of oil-based regimes who make decisions about

spending oil revenues, and, as noted above, we can assume that they care only about

power and incumbency. However, authoritarian regimes are not institutional vacuums

nor are they identical in the “institutional designs” or constitutions, which following

Roeder (1993, 6), can be defined as “a polity’s most fundamental rules (whether written

or not) defining political roles and relationships”. Authoritarian constitutions vary in at

 

   

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least two important respects: the extent of institutionalization of their leadership and the

type of state bureaucratic structure. These institutional differences affect what leaders

do (and can do) with oil rents. To put it differently, the type of institutional design /

authoritarian constitution entails the modus operandi of authoritarian regimes. For

example, in regimes run by an ideologically coherent dominant political party, the

leadership’s decision-making on where to allocate revenues will be more constrained by

considerations of maintaining party hegemony. In military regimes, revenue spending

will be guided by the preference of the officer corps to maintain corporate coherence

and the role of the military forces will be seen as relatively more important. In

personalist regimes, policy-making will be much less constrained and extremely

discretionary, in the first place, which will allow the leader a greater opportunity, than

in other types of regimes, to keep revenues under his private, personal control while

expenditure will be driven by the need to sustain the circle of strategic allies (the top

echelons of the patron-client network). In monarchies, political kinship constitutes the

central institutional core whereby the ruler appoints family members to top bureaucratic

positions (Crystal 1990). Shared kin-based solidarity ensures regime continuity. The

monarch, who is somewhat more constrained than the personalist dictator, will be

guided by the need to look after his political kinship network.

It is therefore plausible that institutional contexts induce certain logics that can

help us explain why politicians act the way they do in different institutional

environments. This suggests there can exist distinct but predictable causal mechanisms

connecting oil windfalls to persistent authoritarianism. The proposition that there can be

different causal mechanisms depending on the contextual institutional variation is not

meant to imply, however, that “the influence of resource rents differ per case and per

country” (Werger 2009, 25), but merely to suggest that there can be distinct yet

regularized patterns of causal processes intrinsically linked to the institutional

characteristics of different kinds of nondemocratic regimes.

In a recent paper, Anderson and Ross (2011) pointed out that “the most credible

version of the resource curse is conditional on the initial regime type of the affected

country” (emphasis added). Wiens (2014, 198) notes that extant theoretical models tend

to treat institutions as exogenous and “rarely consider the ways in which resource rents

affect the determinants underlying the nature of the institutional environment itself”.

 

   

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These new arguments highlight the important role that institutional characteristics can

play in the political resource curse.

Personal rule might provide a particularly conducive environment for the

authoritarian oil curse. The following conditions can facilitate the pro-authoritarian

effects of oil in personalist autocracies. Four factors are the properties of personal rule;

the fifth one pertains to the economic setting typical of personal rule. All of these

mechanisms should be seen as inter-related and complementary. The four regime

properties and the specific condition are the following: First, the leader’s unconstrained,

centralized and discretionary powers, both official and informal, as well as related

policy flexibility; the ruler’s control (“capture”) of the state bureaucracy and its

penetration by the ruler’s patronage network; characteristics of systemic clientelism and

rewards in exchange for loyalty; small winning coalition size and resource stockpiling

mechanism, and, finally, the broader condition is the absence of independent private

elites and their discouragement by the ruler’s dislike of autonomous economic

activities.

First, the principal mechanism is related to the concentration and centralization

of political power literally in the hands of only one man. Personal rule is distinct in

presenting such “advantage” to its ruler. Under conditions of virtually non-existent

checks and balances, discretion enjoyed by the ruler is enormous which opens up many

opportunities for the use of oil rents for the purposes of political survival. Weak rule of

law as well as weak accountability institutions confer “hyper-incumbency advantages”

(Greene 2007) to the chief executive (Wantchekon 2002). The executive discretion

gives the ruler maximum control of policy process, especially of resource allocation.

The absence of constraints means that the leader can enjoy policy flexibility which

typically translates into ad hoc discretionary policy-making as to both the content (on

what to spend) and target groups (who will benefit) of policies. Perhaps counter-

intuitively, such “erratic” policy-making, if employed skillfully, can contribute to

regime durability. As one study shows, the weaker the constraints on leaders, the more

they can affect policy: “leaders matter, but only in settings where other institutions are

weak” (Jones and Olken 2005, 840). Thus, discretionary control of revenues is perhaps

the single most important condition for the survival of oil-based personalist regimes.

 

   

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Second, the personalist ruler controls appointments to key public administrative

positions in the state and can use this strategic patronage (especially ministerial

appointments) as a “coup-proofing” strategy to buy off potential rivals inside the elite

(see Arriola 2009). Oil revenues provide substantial resources allowing the expansion of

the state bureaucratic sector. A tendency of leaders of oil states to expand the public

sector and elevate the role of the state in the economy was first noted by Mahdavy

(1970). He observed that with increase in oil revenues “the government becomes an

important – or even the dominant – factor in the economy” (Mahdavy 1970, 432).

Neopatrimonial state, thus, serves as an important channel for distributing patronage

and securing support of elites.

Third, the ruler-centered patronage network, typically consisting of a narrow

circle of family members, friends and cronies, is another attribute of personalist regimes

which also presents a number of advantages. It allows the ruler to manage intra-elite

power relations through informal channels and to distribute largess bypassing

accountability controls. Research shows that systems based on the patronage network, if

relatively more centralized and institutionalized, can be stable. According to Le Billon

(2003, 415), for example, “the corruption of politics through a system of patron-client

relationships guided by private interests can ensure some degree of political stability

due to the prevalence of reciprocity among political actors” (also see Charap and Harp

2009).

Fourth, personalist regimes have small winning coalitions. Having a small

winning coalition has its benefits too. Most important, it enables the ruler to stockpile

resources. When the winning coalition is large the ruler has to share a large portion of

the available resources to maintain the loyalty of his supporters (Bueno de Mesquita et

al. 2003). Pickering and Kisangani (2010) extend this logic further to suggest that

personalist leaders are able “to accumulate much larger stockpiles of the resources

necessary for political survival than leaders in single-party states”.

Finally, one notable condition made possible by personalist rule is the virtual

absence of truly independent “private” elites. Because of the particular sense of

insecurity, personalist rulers discourage and eliminate all pockets of autonomous

economic and political activity. As a result, the only elite that exists is the state elite;

there is no elite outside the circle surrounding the state (Dunning 2008). According to

 

   

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Chaudhry (1989, 114): “Oil revenues breed large, fiscally autonomous distributive

states that undercut the development of political and economic institutions in the private

sector by displacing oil economic groups and creating new clients through state

spending”.

The broader condition implies that the economic elites have no sources of

wealth or power outside the leader’s network, so they have no other option but to keep

loyalty to the regime (there is no life outside the network). As Shambayati (1994, 309)

pointed out: “Under rentier conditions, loyalty to the system is the most rational course

of action for entrepreneurs. Instead of challenging the state, they will try to gain the

government’s favor by establishing patron-client ties with powerful individuals within

the state structure”. Absence of non-state elites and their deliberate discouragement and

elimination of any institutional pockets of autonomous power makes it especially

difficult to organize societal opposition to the regime and complicates intra-elite

coordination to challenge the ruler from within the elite (Franz and Ezrow 2011).

Personal rule is a difficult environment for opposition to emerge, organize, and

challenge the regime. In a more institutionalized environment, like the rule of FLN

(National Liberation Front) in Algeria, rent-seeking coalitions emerged within the party

to compete for their share of oil rents at the expenditure side (Chhibber 1996). Although

conflicting interests and rent-seeking coalitions can (and do) emerge in more

personalized regimes too, they lack the institutional mechanisms to coordinate and

cooperate among themselves, which exacerbates collective action problems within the

elite.

Different institutional structures of authoritarian rule constrain the behavior of

rent-seeking elite factions. In party-based regimes, various sections of the party or the

military representing different rent-seeking factions have horizontal institutional

channels to coordinate between each other and get their share of rents. This may

eventually empower the rent-seeking groups who may use their new power to depose

the ruler. During the oil boom of the 1970s, General Hugo Banzer, who was the military

ruler of Bolivia at that time, was ousted by his former allies in the military after seven

consecutive years of presidency (1971-1978). His leadership was considered the longest

tenure and a “record in modern Bolivian history” (Malloy 1991, 41). Under personal

rule, the extreme discretion enjoyed by the leader in allocating rents – his exclusive

 

   

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personal control of access to rents and their disbursal – creates networks of personal

dependencies (vertical and radial) and, unlike party or military regimes, personalist

regimes provide no institutional channels of intra-elite coordination.

At the level of Geddes regime types it is difficult to see whether authoritarian

leaderships (not regimes) have a tendency to shift from collective leadership (several

individual veto players), if it existed before oil windfalls, towards a more directive

leadership with one individual veto player (personalist dictator or monarch), that is,

whether oil makes leadership more directive over time. Applying careful process-

tracing techniques can help. It must be noted here that the development of authoritarian institutions need to

be seen as a dynamic process. As Gilley and Holbig (2009, 358) observed “authoritarian

durability cannot be understood as simple perpetuation of a rigid set of authoritarian

institutions, but should be conceived of as a highly dynamic process of adaptation to

changing domestic and international environments”. Shifts within the leadership in one

or another direction are a constant possibility although institutional development always

occurs “in the context of existing institutions and previous institutional innovations”

(Cook 2007, 5). In Chile, Pinochet came to power as part of the military junta but later

sidelined other members of the junta to make decisions without consultation (Geddes

1999; Remmer 1989). Bermeo described the shift towards directive policy-making in

Greece under the rule of officers in the 1970s in contrast to the then prevailing view that

Greece matched the bureaucratic authoritarian model of Latin American dictatorships as

suggested by O’Donnell (1979) (see Bermeo 1995).

Oil wealth presents a peculiar dilemma for autocrats. Oil prices are determined

in the international markets and tend to be highly volatile. This makes oil income a very

unstable source of revenue, and ideally the leader would prefer to diversify the economy

to reduce the dependence on such volatile source of fiscal revenue. The dilemma is that

diversification is risky. A diversified economy can create conditions for the

development of alternative sources of power and autonomous elites, who may use their

wealth to dispose the ruler (Dunning 2005). That is why dictatorial rulers, such as

Mobutu Sese Seko, choose not to diversify their economies; in fact, they may even

pursue the policy of de-diversification (what Mobutu actually did with the Zairian

economy). Given their particularly heightened paranoia about their own insecurity,

 

   

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personalist rulers are especially cautious about pursuing diversification, so they keep

their economies “single-track” for as long as natural resources are available. Thus, to

use the famous phrase by Bueno de Mesquito et al.’s (2003), even though non-

diversification seems to be a bad policy, it can be good politics for some authoritarian

leaders.

The personalist configuration of power with one individual veto player (as

opposed to other authoritarian configurations with one but collective veto player) allows

for maximum discretion over decision-making, which allows the leader to concentrate

so much power that “feeding” a small but loyal group of cronies is sufficient to hold on

power. Unlike institutional patronage (such as party machine), personalist patronage

requires very little institutional investment and a narrower circle of co-opted elites. This

allows the ruler to save more of oil wealth and “tap into” financial reserves in bad times.

Such institutional configuration, which is informally set up but also typically enshrined

in super-presidentialist formal constitution, is beneficial also because it allows the ruler

a great deal of policy flexibility as he adopts ad hoc “policy solutions” in response to

emergent challenges. Indeed, many of these policy innovations turn out to be policy

failures, which can explain why oil states, on average, perform worse than other states.

To summarize, authoritarian regimes can be distinguished by their institutional

configuration. Perhaps, the most crucial institutional difference lies in the institutional

rules about decision-making within the executive leadership. Roeder (1993, 7) argues

that the institutionalization of balancing within the collective leadership increases the

stability of a polity. Personalist regimes might display more continuity when they have

sources of oil rents. This may happen for several reasons, the most important one being

discretionary policy flexibility (MacIntyre 2003) which allows the ruler to respond to

challenges quickly by directing spending in the targeted but ad hoc manner. The

neopatrimonial structuring of the state apparatus and the reliance on patron-client

networks might be also important mechanisms. Finally, the small coalition size allows

the ruler to save revenues and spend them during bad times while the discouragement of

private non-state elites and the dominance of informal institutions prevents would-be

elite dissenters from emerging and organizing opposition to the regime.

It is worthwhile to briefly consider these differences here. The first key

institutional difference is the extent of power concentration (dispersion) in the executive

 

   

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(MacIntyre 2003) and the distinction between collective and directive leadership

(Roeder 1993, 7). The latter is a dynamic dimension: power can shift towards either

institutionalized balancing within the collective leadership (the party bureau or the

junta) or towards the opposite end – one-man rule. Unlike in democracies with elaborate

institutional division of decision-making powers (between legislative and executive

branches, between houses of the parliament and so on), in authoritarian regimes policy-

making is in the hands of those who control the executive branch of the state – either the

political party, the military junta, the royal court, or just a single person. Legislatures

are typically rubber stamps while courts are not independent from the authoritarian

leadership, so normally they do not hold veto power9 – defined as “an individual or

collective actor that has the institutionalized power to defeat a proposed law by

withholding formal approval” (MacIntyre 2003, 37). Under collective leadership there

are rules and constraints that guide the executive. In party-based regimes, relevant

formal (codified) and informal institutions are a set of internal party rules; in military

juntas there are routinized pacts among members of the junta (MacIntyre 2003, 42).

While all of the authoritarian institutional frameworks concentrate decision-

making power – all are basically systems with a single veto player (Tsebelis 2002) –

more subtle differences do exist. The only two configurations of governmental powers

in which a veto player is an individual, not a collective actor, is personalist autocracy

and monarchy (in monarchies, the royal court plays a consultative role, therefore does

not have veto power). This is the form of the most extreme power concentration. The

higher the level of power concentration is the higher the risk of arbitrary decision-

making. As MacIntyre (2003, 21) noted: “An institutional division of decision-making

power helps reduce the risk of arbitrary policy action”. When a veto player is a

collective actor policy-making requires consent of other members of the decision-

making body; such consent is not required under personalist domination. A strong

coherent party or junta constrain the ruler entailing less policy discretion. These nuances

in rules governing decision-making can have important implications for policy-making

guiding access to oil rents and their allocation.

The second dimension – state organizational structure – is useful for separating

two kinds of state administrative apparatuses: 1) legal-rational bureaucratic, and 2)

                                                                                                               9 But may perform other important functions for the regime, see, e.g. Blaydes (2010).

 

   

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neopatrimonial. There are good reasons to incorporate this dimension in studies of

authoritarianism in general and the political resource curse in particular since much

works on the resource curse are concerned with oil’s effects on state institutions (Karl

1997) and differences in the “maturity” of state bureaucratic apparatuses can have

important implications for the effects of oil revenues. In general, the way the state is

organized and the extent of its bureaucratization is an important institutional check on

the power of the executive. However, not all countries develop an autonomous

bureaucratic apparatus at independence. Shefter (1994), for example, shows using the

experience of Western countries that the timing of bureaucratization relative to popular

mobilization influences the types of parties that emerged in Western Europe and the US.

Weakly bureaucratized state apparatuses allowed winning parties to use public

employment as a political tool for rewarding loyalists encouraging patronage parties to

emerge. More corporate and autonomous bureaucracies resist the use of patronage,

which promoted more programmatic parties. Polities that lack a strong state tradition are

vulnerable to state capture (Hellman et al. 2000) and predisposed to the use of

administrative resources by incumbents for their political / electoral advantage (Allina-

Pisano 2010). For the resource curse argument, the difference between bureaucratic and

neopatrimonial public administrations can be crucially important from the point of view

of creating ‘permissive environment’ for the incumbent leaders to disregard

bureaucratic norms in spending rents and also whether bureaucrats themselves have

developed sufficient immunity against abuse of public office.

In this chapter, I formulate and test hypotheses about the relationship between

oil, the type of authoritarianism, and regime stability. The types of authoritarian regime

represent different combinations of ruling coalition, institutional arrangements and

strategies of governance. These characteristics have systematically different effects on

authoritarian regime collapse (Geddes 1999). In the institutional model of authoritarian

politics, leaders’ preferences can be derived from the institutional logics of their

regimes. For example, the preferences of leaders in party-based regimes are shaped by

the need to maintain support of the party’s support constituency which typically

represents the interests of a broader cross-section of the population. In contrast,

personalist rulers are less constrained in their decision-making and rely on the support

of a much smaller elite circle.

 

   

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According to Geddes (1999), in order to understand how authoritarian regimes

break down, we need to look at intra-elite interactions involving competition,

factionalism and rivalry. Most authoritarian transitions begin at the level of intra-elite

interactions. However, the institutional setting also matters as the relations between

factions are shaped by incentives that are inherent in the institutional rules and

procedures. Most important, these institutional differences determine the way in which

splits typically occur within authoritarian elites. Hence, differences in structural

characteristics of authoritarian regimes influence elite behavior and affect how and

when authoritarian regimes collapse. Table 3.1 below, taken from Geddes (1999),

shows that different types of authoritarian regimes have different duration prospects. In

the next pages, I consider how the variation in the interests and behavior of political

elites in military, personal, single party autocracies and monarchies might affect the

impact of oil on the survival of regimes.

In the game-theoretic model developed by Geddes (1999), elites in military

regimes fear internal splits the most. Typically, the army intervenes in politics if there is

a severe crisis that is deemed difficult to manage by conventional political means.

Table 3.1. Durability of different types of authoritarian regimes

Average length of

rule, in years

Regimes

surviving in 1999, %

Military

N

8.5

(32)

11.1%

Military personal

hybrids

9.8

(13)

13.3

Personal

15

(43)

17.3

Single party

hybrids

18.6

(14)

17,6

Single party

25.7

(21)

36.4

Triple hybrid

32.5

(2)

60

Source: Geddes 1999, 133

 

   

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As a part of the state bureaucracy itself (Riggs 1993), the “military as an

institution” is interested in fixing a crisis situation and withdrawing from politics

afterwards. If factionalism within the elite intensifies, the military prefers to return to

the barracks because as a professional organization it fears to compromise its unity as

an institution that may be caused by splits and rivalries within its officer corps. This

explains why military regimes have the shortest lifespan of all autocracies; their average

age is about 8.5 years.

If we follow the logic of elite preferences in military regimes, it would seem

that the availability of oil revenues might affect elite behavior in this subset of

authoritarian regimes in the following way. High resource rents might intensify elite

splits, especially if elites were less coherent in the first instance, as various factions may

wish to get access to the spoils made available to them from abundant oil revenues. If

such risk emerges, oil wealth should accelerate the military’s exit from the political

scene since the military always prefers to withdraw from politics as it faces the

prospects of disunity.

In single party regimes, all actors are interested in regime continuity. Factions in

these regimes are better off if the party stays in power. This explains why party regimes

are the most durable of all authoritarian regimes; their average lifespan is about 26

years. How can oil influence the incentives and behavior of political elites given the

dominance of the single party? It is logical to assume that oil rents may have both

stabilizing and destabilizing effects. On the one hand, oil revenues may fuel internal

struggles over access to rents within the party leadership. Such behavior should

encourage elite factionalism which might lead to political instability. On the other hand,

oil revenues may be used by the party leadership to expand party rule within the society

and to enhance the party’s organizational capacity.

Research suggests that the effect of oil rents on party-based regimes depends on

party discipline, which refers to the extent of a party’s institutional and ideological

strength, and the timing of the onset of windfall revenue. Smith (2005) finds that rents

have a differential impact on the resilience of single-party regimes: they contribute to

durable party rule where parties had been strong before they got access to rents. That is

to say, rents strengthen party rule in regimes where parties had been consolidated; in

contrast, they weaken party rule in regimes where the consolidation coincided with

 

   

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party-building. Based on this finding, Smith suggests that where access to rents

coincides with the process of party consolidation, parties will become “rent havens” and

party rule will be weak. Smith (2007) also claims that regimes in oil-rich states are more

stable than in oil-poor states because the former re-invest oil revenues in strengthening

the institutions of the state and reinforcing their support coalitions.

In personal autocracies, an individual leader dominates politics and policy-

making and rules with the help of the patronage network. Elites depend almost entirely

on benefits and privileges granted to them by the ruler, and their survival thus depends

on the survival of the regime as a whole. Personal autocracies last on average 15 years.

What is the potential role of oil in the sustenance of the personal subset of authoritarian

regimes? Van de Walle (1994) observes that oil wealth promoted “patrimonial

orientation” under Presidents Ahmadu Ahidjo (1960-82) and Paul Biya (1982-), thereby

promoting the authoritarian regime in Cameroon.

Chehabi and Linz (1998) also suggest that there might be a link between oil and

neopatrimonial (sultanistic) governance:

“Rentier states in which the regime is not bound by tradition (unlike the oil monarchies of the Arabian Peninsula) are thus more vulnerable to sultanization. Easily exploitable natural resources whose production is in the hands of one or only a few enterprises with high profits can provide the resources for such a regime, especially when elites are weak. Sugar, oil, and copper exemplify this, each in a different way (Chehabi and Linz 1998, 27). Personalist rulers govern by providing patronage to their supporters, therefore

more oil revenues means more resources available to buy the loyalty of the support

coalition. The patron-client network should be particularly vulnerable to any dramatic

exogenous economic shocks that could disrupt “the material underpinnings of regime

loyalty” (Geddes 1999, 122). Any material scarcity must have a markedly negative

effect on the stable functioning of the patronage network. Therefore, oil should be

critical for the maintenance of personal rule, and oil rents are expected to have a

positive, stabilizing effect on regimes based on personal rule.

Wright (2008) observes that different types of authoritarianism occur under

different conditions, and abundance in natural resources is one of the major factors that

can explain the variation in the form of authoritarian rule. He finds that the main

 

   

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watershed is between personal and other kinds of authoritarian rule, and that personal

rule is more likely to emerge in countries with larger oil endowments, less domestic

investment, and smaller populations. He explains this finding by suggesting that

different types of authoritarian rule require different kinds of political economy in place,

and that personal autocracies and monarchies are more dependent on natural resource

revenue than military and single-party regimes (see in particular the table reporting the

mean values for potential sources of government revenue in authoritarian regimes;

2008, 324). Most importantly, Wright finds that personal autocracies are more likely

than other types of regimes to emerge in countries with more sources of “unearned”

income. In addition, he demonstrates that “larger oil reserves increase the likelihood of

personalist rule,” more specifically that “[i]ncreasing log (oil reserves) by one standard

deviation nearly doubles the probability of being a personalist regime (from 21% to

40%) and of being a monarchy (from 0.65% to 1.21%)” (Wright 2008, 325). Military

and single-party regimes are less likely in countries with larger sources of “unearned”

revenues such as petroleum. These findings are statistically significant and based on

testing a multinomial logit model with the type of authoritarian regime as the dependent

variable and controlling for GDP per capita, ethnic fractionalization and other standard

variables (Wright 2008, 326-327).

Finally, Wright suggests that personal rule occurs “under much different

conditions than single-party or military rule,” and “if natural resource dependence

impedes democratization as earlier research suggests … then this may be because

natural resource dependence breeds personalist authoritarian rule, but not necessarily

other forms of authoritarian rule” (Wright 2008, 325).

Acemoglu and his colleagues (2004) also argue that personal authoritarian

regimes (“kleptocracies”, as they call them) are more common in resource abundant

countries and that “greater natural resource rents facilitate kleptocracy” (2004, 166).

Similarly, Basedau (2005, 14) points out that natural resources can provide a “fertile

soil” for neopatrimonialism.

The persistence of monarchy in the oil-rich Gulf region has long been linked to

that region’s oil abundance (Stepan et al. 2014). Theories of the rentier state saw the

Gulf monarchies as the embodiment of the fiscally autonomous rentier state that can

distribute its plentiful income to their subjects to make them politically acquiescent.

 

   

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Table 3.2. Predicted impact of oil and the type of authoritarianism

Type of authoritarianism Relevance of oil for

survival

Oil’s expected impact

on autocratic survival

Military low negative

Single party mixed negative / positive

Personal high positive

Monarchy high positive

The discussion above can be summarized in the form of the following hypotheses

(see Table 3.2):

• H1: Oil should be associated with less durable rule in military regimes (by

encouraging elite splits) and more durable rule in personalist regimes and

monarchies.

• H2: Impact of oil rents on regime survival in single party regimes is ambiguous

and probably depends on prior institutionalization of the ruling party.

• H3: Oil and personalism should be closely related. Oil should prolong the

length of personalist regimes.

• H4: Oil should make more difference for the survival probability and

democratization prospects of personalist regime rather than other types of rule

because personalist regimes are more dependent on oil rents and other sources

of “unearned” income.

• H5. Personalist regimes are expected to suffer more from the oil curse’s

democracy deficit, as personalism in general is particularly inimical to

democratization.

• H6. Oil should enhance the survival of mixed-personalist regimes for the same

reasons as for personal rule.

3.3. Some empirical evidence for the oil-personalism link

3.3.1. Methods and measures To analyze the data, I used descriptive statistical and survival analysis techniques. The

latter is used for estimating and comparing survivor functions (survival probabilities) of

 

   

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two or more groups and evaluating the relationship of explanatory factors to survival

time (Kleinbaum and Klein 2005). Survival analysis techniques allow one to analyze

data involving time until an event occurs. An event is usually death or failure. Survival

analysis is advantageous over other statistical methods as it allows one to work with

incomplete data where, for example, subjects enter and leave the study at any point in

time within the study period. If cases do not have the end point, that would indicate that

an event of interest has occurred, they are considered “censored”. They can be censored

because of loss to follow-up or withdrawal from the study for the reasons other than that

of interest. I use the Kaplan-Meier (KM) method to estimate and compare survival

probabilities between groups.

In order to explore the hypotheses put forth in the previous section, I conducted

an analysis of oil and gas data and duration of various regimes using the statistical

method of survival analysis. Tables and figures below present summary statistics on

duration, regime breakdowns and graphs of KM plots in the two groups compared

(separated by their “exposure” to high oil rents) and across the type of authoritarianism..

The main findings confirm that autocracy is more likely to survive in personalist

regimes with oil than without oil. This is also true for party-based regimes. When the

outcome of interest is democratic transition, not regime collapse, within-country

comparison suggests that while party-based and military regimes in oil-producing states

had 7 and 9 transitions to democracy respectively, the probability of democratic

transition in personalist or monarchical autocracies was zero. Therefore, one can

conclude that one type of dictatorship that is indeed cursed by oil more than any other

type of regime is the personalist type of autocracy. Moreover, in one most prominent oil

state, namely Venezuela under Chávez, and also one of the two major oil producers that

was democratic for a substantial period of time that collapsed (the second such case is

Peru), the post-democratic regime that emerged was highly personalistic. This suggests

that oil not only promotes personalist autocracy but also affects the emergent regimes in

a post-democratic context like Venezuela’s under Chávez.

To test the claim that oil is connected to the structure of regime and their

interaction impacts the likelihood of democratization (the central proposition of the

“political resource curse” literature), I analyzed data gathered from two datasets. One

set of data comes from Geddes, Wright and Frantz (GWF data) updating and extending

 

   

83

the original autocratic regime coding by Geddes (1999).10 To overcome the problem of

a large number of hybrid regimes, the GWF data coders use the following rules of

aggregating or collapsing regime types:

- Party-based regimes = party-based, party-military, party-personal, party-

personal-military, oligarchy, Iran 1979-2010;

- Military regimes = indirect military, military, military-personal;

- Personalist regimes = personal;

- Monarchical regimes = monarchy.

For some analyses, I used a different set of coding rules to capture a separate

category of “mixed personalist” regimes. For this purposes, the following rules were

applied: party-based regimes were coded as “pure party”, any regime with the

personalist attribute (i.e. military-personal, party-personal and triple hybrids) were

coded as “mixed personalist”, and all non-mixed personalist cases were coded as “pure”

personal.

Cases were included in the dataset based on the following set of considerations.

First, Ross (2012) argues that oil became a curse only after 1970s. Before the oil

nationalizations in the 1960-70s, there was not much difference between oil producers

and non-oil states, as Ross’ (2012) study demonstrates. This suggests that oil curse is

limited by the scope conditions of time period (after 1970) and state ownership of oil.

Second, Geddes (2009) argues that the causes and mechanisms of democratization are

not uniform across time and differ systematically by the type of authoritarianism. She

suggests that there are differences between earlier democratic transitions and the later

wave of democratization. Given this, I limited my study to the post-1950 period. The

dataset excludes regimes that ceased to exist prior to 1950s, such as Nepal (1946-51).

This excludes all democracies that emerged during the first long wave in the late 19-

early 20th century. For example, it seems problematic to include countries like Norway

and Australia in the same group as Nigeria and Ecuador and expect that oil will

influence macro-political developments in two groups similarly (Karl 1997). Norway

had been a democracy since the late 19th century and had a set of mature and

consolidated democratic institutions by the time it experienced an oil boom in the

1970s. Neither the oil curse nor the rentier state literatures claims that oil rents would

                                                                                                               10 Data and codebook are available at http://sites.psu.edu/dictators.

 

   

84

influence the regime trajectory of a highly consolidated democratic system. In short, my

study has two scope conditions: it applies only to the regimes in the developing world

and post-communist countries, and it only includes regimes that democratized after

World War II and over the course of the third wave of democratization or later.

There has been a longtime debate over the issue of measuring oil wealth or

resource dependence. Many previous measures used some indicator of oil or mineral

resource dependence. Common indicators include oil as a percentage of a country’s

GDP or fuel’s ratio to total exports. Previously, this was measured as the level of

resource intensity or resource dependence. High resource dependence connotes that

resource rents account for a significant fraction of government fiscal revenue (see e.g.

Dunning 2008). Following Ideally a measure of oil should be able to capture “oil

dependence” indicating that resource rents account for a significant fraction of

government fiscal revenue. This understanding of oil dependence comes closer to the

concepts of “rentierism” and the “rentier state” (Beblawi and Luciani 1987; Mahdavy

1970). Mahdavy (1970, 428) defines rentier states as “those countries that receive on a

regular basis substantial amounts of external rent”. The main idea of the authoritarian

resource curse literature is that oil promotes authoritarian rule. This is especially true for

states that not only have abundant reserves of oil and natural gas, but also are highly

dependent on the constant supply of petroleum rents (for this distinction, see Dunning

2008).

There are a number of problems with the conventional measures of “resource

dependence”. First, there is a problem that oil can be endogenous to GDP. Because less

developed countries tend to have smaller GDP, putting GDP in the denominator is

problematic. Second, poorer countries cannot consume much of their oil and therefore

are more likely to export most of oil they produce (Ross 2012). To avoid these

problems, it is now common to use an alternative measure of oil wealth -- oil income

per capita. This is not a perfect measure for fuel dependence, but is much easier to

calculate for greater number of countries, more accurate, and allows one to overcome

the common measurement problems. Following recent studies by Haber and Menaldo

(2011), Ross (2012), Wright et al. (2012), I use oil income per capita to measure “oil”.

Oil income dataset was taken from Ross (2013). Countries are divided into two groups:

oil producers and non-oil producers. A country is defined as an oil producer if it

 

   

85

produces at least a hundred U.S. dollars per capita from oil and gas sale in a given year

(Ross 2012). All other cases were coded as “non-oil”. This is computed based on the

formula: crude oil production multiplied by the price of crude oil divided by population

(Haber and Menaldo 2011; Ross 2013).11

When it comes to the coding of regimes, I used regime data from Geddes et al.

(2014) (hereafter “GWF”) dataset. Regimes are coded as party, personalist, military,

monarchy or democracy. A number of important oil producers are not coded in the

GWF data due to small population size. I added four cases of major oil producers with

small population size and coded them myself as follows: Bahrain (monarchy), Qatar

(monarchy), Equatorial Guinea (personalist) and Trinidad (democracy since 1961,

Lijphart 2012). I excluded the cases coded in the GWF data as periods of warlord rule

or foreign occupation, such as, for example, Bosnia-Herzegovina and Afghanistan after

2001, East Germany, South Vietnam and South Yemen. I “normalized” the duration of

Oman’s regime (1941-NA)12 so that the maximum duration of regimes in the data does

not exceed a maximum of 100 years. Lastly, I removed all short periods of instability

lasting less than 3 years, because these are better considered as interregna (Geddes

1999).

There are two events of interest: regime failure and democratic transition.

‘Regime stability’ or ‘regime durability’ is understood hereafter as “the degree to which

the political system may be expected to remain in existence” (Huntington 1991, 11). A

more demanding definition of regime stability is the ability of a regime to meet and

overcome crises (Slater and Fenner 2011); as Huntington (1991, 11) explains, “the

stability of a system differs from the nature of the system”. In the GWF dataset, an

autocratic regime failure occurs in the following events: when a competitive elections

took place and a new government is allowed to sworn in; when the government is

toppled by a rebellion, a military coup, civil war or foreign invasion, and replaced by

another regime. A separate variable codes for the type of regime transitions whether a

subsequent regime is autocratic (called “autocratic transition”), democratic (marking

“democratic transition”), warlord or foreign occupied or simply right-censored

indicating that the regime was still in power in 2010.

                                                                                                               11 “Oil_gas_value_POP_2009 in Ross’ (2013) dataset. 12 "NA” indicates that the regime was still in power as of December 2010 (Geddes et al. 2014).

 

   

86

Figure 3.1. A model of democratic and autocratic transitions

Source: Gleditsch and Choung 2004, 6

Since regime collapse can lead to two outcomes of either democratic transitions

or those leading to a new authoritarian regime (like in Iran after the overthrow of the

Shah in 1979) (see Figure 3.1). Essentially, I follow the logic developed by Gleditsch

and Choung (2004), applied to the oil curse in a recent study by Wright et al. (2012). I

test both variants of the oil curse theory: first, that oil prevents democratic transitions

and, second, that oil makes authoritarian regimes remain authoritarian (authoritarian

durability), even after they have experienced a regime change.

As discussed above, the thesis about oil harmful effects is both between-country

and within-country. To estimate the effect of oil, I use survival analysis which is used

when researchers want to find out how a treatment (in our case, oil) impacts the survival

chances of different subjects (in our case, political regimes) during the observation

period. My study covers 333 regime cases (of which 71 are oil-producing countries and

 

   

87

262 - non-oil producing states) for a period of 1950-2010. The unit of analysis is

“political regime” including both autocracies and democracies. The time in power for

regimes ranges from a minimum of 3 years (e.g. Turkey 1980-83, Belarus 1991-94) to a

maximum of 100 (e.g. Saudi Arabia, Oman). The average duration of regimes in the

dataset is 19 years.

3.3.2.Analysis As the analysis shows, the average duration time of regimes in non-oil producing

countries is 17.81 years (median: 14.00), ranging from minimum of 3 years to 85 years

(see Table 3.3). For oil-producers the mean was higher at 27.46 (median: 20.00). The

difference between the two median scores is 6 years. Thus, oil-producing regimes have

on average longer lifespans compared to those that lack oil. These comparative results

are statistically significant (F=18.249, p <.0005).

Table 3.3. Duration of regimes by oil

Duration (years) OIL PRODUCER NON-OIL

Mean 27.5 17.8

Median 20.0 14.0

N 71 262

Source: calculated from dataset

Among regimes without oil (262 in total), regime types were distributed as

follows: 90 were democracy (34% of all non-oil), 62 (24%) were personalist autocracy,

57 (22%) single-party regime, 42 (16%) - military regime, and 11 (4%) monarchy (see

Table 3.4). In regimes with oil (71 in total), 20 (28%) regimes were democracy, 26

(27%) were single party, 14 (20%) were personalist regime, 11 (16%) - military

dictatorship, and 7 (10%) were monarchy. This means that 20 percent of all regimes

with oil were personalist, second after democracy and party-based rule.

 

   

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Table 3.4. Distribution of regimes within oil- and non-oil states

(numbers are counts, percentages in parentheses)

Source: calculated from dataset

As for the distribution of regime types, about 80% of all democracies, personalist

regimes and military dictatorships as well as 75 % of all party-based regimes were in

states that lacked oil.

Table 3.5. Spread of regime types across oil- and non-states

(numbers are percentages)

Of all

democracies

Of all

single-

party

Of all

personalist

Of all military

regimes

Of all

monarchies

Oil

producing

18 25 18 21 39

Non-oil 82 75 82 79 61

TOTAL 100 100 100 100 100

Source: calculated from dataset

OIL PRODUCER NON-OIL

Democracy 20 [28%] 90 [34%]

Party 19 [27%] 57 [22%]

Personalist 14 [20%] 62 [24%]

Military 11 [15%] 42 [16%]

Monarchy 7 [10%] 11 [4%]

TOTAL 71 [100%] 262 [100%]

 

   

89

Of all personalist regimes that ever existed 82 percent were oil poor, 18 percent enjoyed

oil wealth. Naturally, most of the world’s regime types were in oil-poor countries

because there are simply more countries that are not oil exporters (see Table 3.5).

3.3.3. Survival estimates

Oil and non-oil

The findings reported in Table 3.6 show survival probabilities for oil and non-oil

producing states when the event of interest is any regime failure. Of 262 non-oil

producing states, 177 underwent regime change or regime failure while 85 of them

continued without any transitions and were still in power at 2010. In those regimes that

had oil, less than half experienced some kind of regime change. Of the total number of

71 oil-producing regimes, 41 were still in power in 2010.

Table 3.6. Regime failures in oil- and non-oil states

Number of Events

Total Number

Number surviving (at 2010) Percent surviving

Non-oil producer 177 262 85 32.40%

Oil-producer 30 71 41 57.70%

Overall 207 333 126 37.80% Source: calculated from dataset

The median scores are 47 years for oil-producing regimes and 17 years for non-oil

regimes (not reported here), which indicates a stark difference in the duration of

regimes with and without oil. This is confirmed in a graph of Kaplan-Meier estimates

below (see Figure 3.2). Other things being equal, regimes that have oil are much more

durable that those that lack it. The Log Rank tests statistic is significant (p<.0005, Chi-

Square: 22.131). This indicates that the difference is statistically significant.

 

   

90

Figure 3.2. Kaplan-Meier Survival estimates by oil

Source: calculated from dataset

By regime type

Event: regime failure

As a second step, I compared whether the effect of oil remains strong after the sample is

divided by regime type, i.e. comparing survival probabilities of oil and non-oil

producing states by regime type. This is to check whether the effect of oil is conditioned

on the type of authoritarian rule or not. I first use regime failure as the event of interest,

without separating democratic and autocratic transitions. The results, shown below,

indicate that oil’s stabilizing effects remain strong only in party-based and personalist

regimes, but not military and monarchies. This means that when oil is introduced in

single-party and personalist regimes separately, those that have access to oil have better

survival probabilities than those that lack it. In party-based regimes, the median survival

without oil is 27 years compared to 47 years in oil producers. Of a total number of 76

party regimes, 57 non-oil producers experienced 40 events of some regime change,

while 19 party-based oil-producers had 10 regime collapse events (see Table 3.7).

 

   

91

In the personalist regimes, probability of survival at the median is not possible to

calculate (because there are too few regimes that experience any regime change), but

the mean scores are 32 for regimes with oil as opposed to 16 years for regimes without

oil. Of a total number of 76 personalist regimes, 62 were non-oil producers and 14 were

oil-producers. Non-oil regimes had 51 regime changes while oil-producers had only 3

events that qualify as regime failure.

Table 3.7. Number of regime failures by oil in different regimes

Regime type Oil Number of

regime failures

Total number of regimes

party-based

regime

non-oil 40 57

oil 10 19

Overall 50 76

personalist

regime

non-oil 51 62

oil 3 14

Overall 54 76

military

regime

non-oil 40 42

oil 10 11

Overall 50 53

monarchy non-oil 8 11

oil 1 7

Overall 9 18

democracy non-oil 38 90

oil 6 20

Overall 44 110

Overall Overall 207 333

Source: calculated from dataset

In other words, other things being equal, personalist regimes with oil had on average

twice as much chance of survival at any given moment as personalist regimes without

oil. The Chi-Square coefficient for party and personalist regimes are 7.063 and 9.948

respectively and the p values suggest statistically significant results. While the relevant

 

   

92

averages for monarchies and democracies are also higher for regimes with oil, for the

military regimes there is almost no difference. For military regimes, monarchies and

democracies, the p values for Log Rank indicators are above 0.05 levels indicating that

the differences for these regime types are not statistically significant. A look at the

survival curves (see Figure 3.3) confirms this as the survival curves for military regimes

overlap considerably which suggests that there is no statistically significant difference

between the two survival functions. I also used an alternative coding with a category of

“mixed” personalist regimes, i.e. regimes that combine personalism with the military or

a hegemonic party. The results are statistically significant. This suggests that oil’s effect

on authoritarian survival is not uniform across regimes types and makes a difference

only for the survival probability of party-based, personalist and mixed-personalist

regimes, but has not effect on the survival of military regimes and monarchies.

Figure 3.3. Kaplan-Meier Survival Estimates for oil and non-oil producers by

regime type

(Event of interest: Regime failure)

Log

Rank

(Mantel-

Cox)

Chi-

Square:

7.063

df: 1

p<0.05

 

   

93

Log

Rank

(Mantel-

Cox)

Chi-

Square:

9.948

df: 1

p<0.005

Log

Rank

(Mantel-

Cox)

Chi-

Square:

0.046

df: 1

p>0.5

 

   

94

Log

Rank

(Mantel-

Cox)

Chi-

Square:

3.584

df: 1

p>0.05

Log

Rank

(Mantel-

Cox)

Chi-

Square:

1.405

df: 1

p>0.05

 

   

95

Source: calculated from dataset

Log

Rank

(Mantel-

Cox)

Chi-

Square:

4.264

df: 1

p<0.05

When autocratic transition is taken as the event of interest, then again the differences

are statistically significant only for party-based regimes, personalist and mixed-

personalist regimes (democracies excluded). For monarchies and military regimes the p

values are >.05 indicating that the results are not statistically significant. [Kaplan-Meier

estimates not shown here].

By regime type

Event: Democratic transition

Table 3.8 below shows the number of democratic transitions in different sub-sets of

authoritarian regimes divided by oil. Among party-based regimes transitions to

democracy are about equally distributed between those with oil and those that lacked it.

Of a total number of 19 democratic transitions in party-based regimes, 12 were in non-

oil and 7 in oil-rich regimes. Among military regimes, the difference is 29 (non-oil) to 9

(oil). The most striking difference is within the personalist sub-set. As can be seen from

the table, among personalist regimes all of the 19 democratic transitions occurred in

non-oil regimes and none in those with oil.

 

   

96

Next, I repeat the survival analysis, this time replacing the regime breakdown

with the dichotomous variable capturing democratic transitions. The results shown

below (Figure 3.4) indicate that the statistically significant results (p < .05) obtain only

for personalist regimes. In personalist regimes (14 oil producers, 62 non-oil), those that

had no access to oil experienced 19 events leading to democratic transitions, while the

personalist regimes with oil have no record of a democratic transition. Although the

same is true for monarchies, the result for monarchies is not statistically significant (p >

.05) possibly due to the small sample size for this sub-set. I also use an alternative

coding with a category of “mixed” personalist regimes. The results are not statistically

significant which suggests that oil blocks democratic transitions only in “pure”

personalist regimes.

Table 3.8. Number of democratic transitions by oil in different regimes

Regime type Oil Number of democratic

transitions

Number of regimes

party-based

regime

non-oil 12 57

oil 7 19

Overall 19 76

personalist

regime

non-oil 19 62

oil 0 14

Overall 19 76

military regime non-oil 28 42

oil 9 11

Overall 37 53

monarchy non-oil 2 11

oil 0 7

Overall 2 18

Overall Overall 77 223

Source: calculated from dataset

Figure 3.4 shows Kaplan-Meier survival estimates by oil for regimes when the event of

interest is democratic transitions (shown only for party-based, personalist regimes,

 

   

97

military and mixed-personalist regimes) which indicates that the results are statistically

significant only for personalist regimes, and not significant for party-based, military

regimes, monarchies and mixed-personal categories.

Figure 3.4. Kaplan-Meier Survival Estimates

(Event of interest: democratic transition)

Log Rank

(Mantel-

Cox)

Chi-

Square:

0.544

df: 1

p=0.5

[note the

overlappin

g lines

indicate not

statistically

significant

difference]

 

   

98

Log Rank

(Mantel-

Cox)

Chi-

Square:

5.961

df: 1

p<0.05

Log Rank

(Mantel-

Cox)

Chi-

Square:

0.112

df: 1

p>0.5

[not

significant]

 

   

99

Source: calculated from dataset

Log Rank

(Mantel-

Cox)

Chi-

Square:

0.698

df: 1

p>0.05

[not

statistically

significant]

Finally, if oil affects democratic transitions only in the personalist sub-set of regimes, I

also run a separate analysis by splitting the data into personalist and otherwise (non-

personalist) groups. The results are as follows (see Figure 3.5). When checking for

regime failures, oil has a statistically significant impact on the survival of both

personalist and non-personalist regimes (For non-personalist regimes, Log Rank Chi-

Square: 11.909, p<0.005, for personalist regimes Chi-Square: 9.948, p<0.005). The

same is true for autocratic transitions. Yet, when including democratic transitions as the

event of interest, the results remain significant only for personalist regimes, but

disappear for non-personalist regimes (For non-personalist regimes, Log Rank Chi-

Square: 1.539, p>0.05; for personalist regimes Chi-Square: 5.691, p<0.05) (see Figure

3.5 below). This suggests that, other things being equal, much of oil democracy-

dampening effects occur within the personalist sub-set of autocracy, and not necessarily

in other autocratic regimes. This means oil is a personalist regime’s curse.

 

   

100

Figure 3.5. Kaplan-Meier Survival Estimates with data split into personalist and

non-personalist regimes (Event of interest: democratic transition)

NON-Personalist

Log Rank

(Mantel-

Cox)

Chi-Square:

1.593

df: 1

p>0.05 [not

statistically

significant]

Personalist

Source: calculated from dataset

Log Rank

(Mantel-

Cox)

Chi-Square:

5.961

df: 1

p<0.05

 

   

101

Within-country comparison

As a next step, I do within-country comparison for 71 regimes that are oil producers.

Does the survival probability of regimes within the oil-producing states depend on the

regime type that they have? Within the oil-producing group, a total number of 16

democratic transitions occurred (see Table 3.9), none of which, as noted above, in

personalist regimes or monarchies. The difference in survival functions between

autocratic regimes (oil states only) is statistically significant (Log Rank test: Chi-Square

54.7, p value < 0.005).

Table 3.9. Number of democratic transitions among oil-rich authoritarian regimes

by regime type

Source: calculated from dataset

In other words, a subset of oil-producing autocracies that has been especially resistant to

democratic transitions is personalist dictatorships. These cases are profiled in Table 3.10

below.

While some may disagree with the inclusion of Russia in the personalist

category, yet the Russian regime has been described by various scholars as personalistic

and neopatrimonial. Electoral competition remains the primary institutional mechanism

for selecting government and it is therefore reasonable to call Putin’s regime a hybrid,

rather than closed authoritarian, regime that combines the institutional procedures

characteristic of democracy with authoritarian practices that violate the essence of

democracy in practice (Levitsky and Way 2010; Hale 2010). Sakwa (2011) refers to

Putin’s Russia as the dual state in which “the legal-normative system based on

Number of

democratic

transitions

Number of regimes

surviving (as of 2010)

Total number

of regimes

Party 7 12 19

Personalist 0 14 14

Military 9 2 11

Monarchy 0 7 7

TOTAL 16 35 51

 

   

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constitutional order is challenged by shadowy arbitrary arrangement [that is] the

administrative regime, populated by various conflicting factions”. Ledeneva (2013)

prefers the local term “sistema” (the Russian word for “system”) to refer to Putin’s

networked model of governance based on a web of largely informal institutions and

relationships. Oil revenues have played a significant role in the entrenchment of the

Putin regime (Goldman 2008; Gaddy and Ickes 2013).

Table 3.10. “Pure” personalist regimes in oil states that have been “immune” to

democratization (N=14)

Country Years Duration Oil income per

capita (2010)

Region

Azerbaijan 1993-NA 17 3718.5 FSU

Cameroon 1983-NA 27 113.72 SS Africa

Chad 1990-NA 20 320.98 SS Africa

Congo-

Brazzaville 1997-NA 13 2482.11

SS Africa

Equatorial

Guinea 1979-NA 31 13997.13

SS Africa

Iraq 1958-63 5 658.92 MENA

Iraq 1963-68 5 646.5 MENA

Iraq 1979-2003 24 665.8 MENA

Kazakhstan 1991-NA 19 3025.83 FSU

Libya 1969-NA 41 8162.1 MENA

Russia 1993-NA 17 2672.29 FSU

Sudan 1989-NA 21 434.43 SS Africa

Venezuela 2005-NA 5 2517.18 L America

Yemen 1978-NA 32 519.17 MENA

Note: NA=still in power as of 2010; The regimes of Qaddafi in Libya and Saleh in Yemen were overthrown in violent uprisings in 2011, but have produced civil war, not democracy, in both countries. Source: from dataset; Regime data from GWF; oil income data from Ross (2013).

 

   

103

Another way to show that democratic transitions never occurred in personalist regimes

is presented in Table 3.11 below. The starting point for all democratic transitions was

either military or party-based regime, and never personal rule.

Table 3.11. Democratic transitions in oil-rich states

(N=16)

Country Years Duration Year of

democratic

transition

Regime type Region

Albania 1944-91 47 1991 party E Europe

Argentina 1966-73 7 1973 military L America

Argentina 1976-83 7 1983 military L America

Bolivia 1971-79 8 1979 military L America

Chile 1973-89 16 1989 military L America

Congo-

Brazzaville 1968-91 23 1991

party

SS Africa

Ecuador 1972-79 7 1979 military L America

Hungary 1947-90 43 1990 party E Europe

Indonesia 1966-99 33 1999 party SE Asia

Mexico 1915-2000 85 2000 party L America

Nigeria 1966-79 13 1979 military SS Africa

Nigeria 1993-99 6 1999 military SS Africa

Peru 1968-80 12 1980 military L America

Romania 1945-89 44 1989 party E Europe

Senegal 1960-2000 40 2000 party SS Africa

Venezuela 1948-58 10 1958 military L America

Note: If interregna are included, democratic transitions also occurred in Azerbaijan 1992-93, Mauritania 2007, Russia 1991, and Venezuela 1947. Since these did not lead to a lasting outcome of at least 3 years, they were excluded. Source: calculated from dataset

Democracy was rare in oil states and existed only in the following 19 cases (see Table

3.12). Interesting that democracy was relatively more durable in Latin America

(although the case of Venezuela warrants caution) and Eastern Europe, but not in

 

   

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Africa, and there were no democracies among oil-producers in the former Soviet Union

and he Middle East. The democratic regime that existed in Nigeria between 1979-83

was replaced by another military regime (1983-1993) and then a military-personalist

regime (1993-99) and even after the transition to civilian rule and democracy in 1999,

the Nigerian regime can perhaps be better described as competitive authoritarianism

(Levitsky and Way 2010). The short-lived democratic regime in the Republic of Congo

(1992-97) was succeeded by a personalist regime (1997-present). Democracy in Peru

collapsed on 1992 and was replaced by a personalist regime too (1992-2000), which is

not in the data of oil states because oil income per capita for this period fell below the

hundred dollars/capita threshold (hovered around 50 dollars per capita) and therefore

Peru was coded as non-oil for this period. The Argentinian 1974-76 democracy

collapsed in 1976 and was followed by a military regime (1976-83). Finally, the

Venezuelan long-time democracy collapsed around 2005 and gave rise to a personalistic

regime. Although generalizations may not be accurate, the pattern seems to be that

when an oil-rich democracy breaks down and autocratization takes places, it tends to

produce strong personalistic tendencies (as illustrated by the cases of Congo,

Venezuela, and, to a certain extent, Nigeria and Russia after the early 1990s).

Table 3.12. Democratic regimes in oil states

(N=19)

Country Years Duration Region

Argentina 1974-76 3 L America

Argentina 1984-NA 27 L America

Bolivia 1983-NA 28 L America

Brazil 1985-NA 6 L America

Colombia 1958-NA 52 L America

Congo-Brazzaville 1992-97 5 SS Africa

Croatia 1992-NA 19 E Europe

Ecuador 1979-NA 31 E Europe

Hungary 1990-NA 20 E Europe

Indonesia 1999-NA 11 SE Asia

Mexico 2000-NA 10 L America

Nigeria 1979-83 4 SS Africa

 

   

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Nigeria 1999-NA 11 SS Africa

Peru 1980-92 12 L America

Peru 2010-NA 9 L America

Romania 1990-NA 20 E Europe

Thailand 2007-NA 3 SE Asia

Trinidad and Tobago 1961-NA 50 L America

Venezuela 1958-2005 47 L America

Note: NA=still in power in 2010 Periods of instability coded as democracy but lasted less than 3 years were excluded. These would include the following: Russia 1991-93, Azerbaijan 1993, Mauritania (2007-08), and Venezuela (1947-48). None in MENA and with very short periods in FSU. Source: from dataset

In sum, the findings from the survival analysis can be stated as follows: Oil has the

strongest authoritarian-enhancing and democracy-inhibiting effect in personalist

regimes. Two other types of regime where oil prolonged authoritarian rule are party-

based and mixed-personalist. However, oil had no effect on democratic transition in

these two regime categories. Finally, oil does not seem to have made much of a

difference for military regimes and monarchies (see Table 3.13).

Table 3.13. Survival analysis results summarized: effect of oil on regime

outcomes Strong = statistically significant effect of oil

None = no statistically significant effect of oil

Regime failure Autocratic

transition

Democratic

transition

Party Strong Strong None

Personalist (pure) Strong Strong Strong

Military None None None

Monarchy None None None

Mixed-personalist Strong Strong None

Source: author

 

   

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3.4 Oil, personalization and the case of scrapping term limits

Executive constraints

I also looked at the “personalization” effect, namely the expectation that oil revenue

will force regimes to develop toward personalism or to increase sultanistic tendencies.

Table 3.14 present the scores on the executive constraints scores for personalist and

party-based regimes with oil. According to Polity IV, the concept and corresponding

variable XCONST “refers to the extent of institutional constraints on the decision-

making powers of the chief executive, whether an individual or a collective executive.

This is similar to the notion of ‘horizontal accountability’ found in the democracy

literature but it assumes that dictators may also be bound by certain institutional

constraints” (Marshall et al. 2014, 62). The continuum is a 7-point scale ranging from

the worst score 1 indicating “unlimited executive authority” to 7 = “executive parity or

subordination”. As can be seen from Table 3.15 personalist regimes tend to have on

average less effective constraints on their chief executives compared to more

institutionalized party-based regimes.

Table 3.15. Executive constraints in oil-rich personalist and party-based regimes

Oil-rich personalist

Oil-rich party-based

Regime Executive constraints

(XCONST) score Regime Executive constraints

(XCONST) score Azerbaijan (1993-) 2

Algeria (1962-92) 2

Cameroon (1983-) 2 Angola (1975-) 3

Chad (1990-) 2 Congo Brz.(1968-91) 2

Congo Brz.(1997-) 2 Egypt (1952-) 3 Eq. Guinea (1979-) 2 Gabon (1960-) 3 Iraq (1979-03) 1

Indonesia (1966-99) 2

Kazakhstan (1991-) 2

Malaysia (1957-) 5

Libya (1969-) 1

Mexico (1915-00) 4

Russia (1993-) 4

Senegal (1960-00) 3

Sudan (1989-) 2 Syria (1963-) 3

 

   

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Venezuela (2005-) 4 Tunisia (1956-) 2 Yemen (1978-) 2

Average for group 2.9

Average for group 2.2

Average (pure party) 3.4

Note: scores are the averages for 2005-2010, except for Iraq (2003), Mexico (1990-1995), Senegal (1990-1995), Indonesia (1995-1999), Algeria (1985-1990), Congo (1985-1990); includes all party-based regimes except communist regimes, Iran (difficult to categorize), and Uzbekistan and Turkmenistan inaccurately put in the aggregate category of party-based regimes); XCONST runs from 1 to 7, with higher scores indicating better performance. Source: XCONST scores from Polity IV data, regime codings from the GWF dataset; In the non-communist world, pure party-based regimes with oil are only 5: Angola, Malaysia, Mexico, Senegal, and Tunisia.

I also looked at the potential effects over time, assessing the possible effects of

the 2004 oil boom on the executive constraints. The results reported in Table 3.16

indicate that there was not much change along this measure of checks and balances in a

before-after analysis. Regimes with low constraints on the executive, except for

Malaysia (5) and Venezuela before Chávez (6), largely kept low scores after the oil

boom. There was an unusually striking improvement in the military-led regime in

Algeria (from 2 before oil to 5 after the oil boom) and Syria (from 1 to 3), but there was

no noticeable increase in the executive checks in personalist regimes where these scores

were already very low (except for Russia where this score was higher perhaps due to a

stronger role of the parliament).

Table 3.16. Executive constraints and the 2004 oil boom

Regime XCONST before

XCONST after

Regime type

Algeria 92-NA 2 5 military Angola 75-NA 3 3 party Azerbaijan 93-NA 2 2 personal Bahrain 71-NA 2 2 monarchy Cameroon 83-NA 2 2 personal Chad 90-NA 2 2 personal Congo-Brz 97-NA 1 2 personal Egypt 52-NA 3 3 party Eq. Guinea 1979-NA 2 2 personal Gabon 60-NA 2 3 party Iran 79-NA 3 2 party

 

   

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Kazakhstan 91-NA 3 2 personal Kuwait 61-NA 3 3 monarchy Libya 69-NA 1 1 personal Malaysia 57-NA 5 5 party Oman 41-NA 2 2 monarchy Qatar 1971-NA 1 1 monarchy Russia 93-NA 3 4 personal Saudi Arabia 27-NA 1 1 monarchy Sudan 89-NA 1 2 personal Syria 63-NA 1 3 party Tunisia 56-NA 3 2 party Turkmenistan 91-NA 1 1 party United Arab Emirates 71-NA 3 3 monarchy Uzbekistan 91-NA 1 1 party Venezuela 05-NA 6 4 personal Yemen 78-NA 2 2 personal

Notes: includes the regimes surviving as of 2010, excludes democracies and regimes that democratized. XCONST scores are 6-year averages for the periods of 1990-95 (before oil boom) and 2005-2010 (after oil boom); except for the following cases where scores from other periods were used: not available (Angola 1985-1990, Yemen 1993-1997); regime start date (Azerbaijan 1993-1998, Congo-Brz 1997-2002, Kazakhstan 1992-97, and Russia 1993-1998). XCONST scale is ranging from “1” being the worst to”7” being the best. Source: Polity IV

While oil fuels personalization of power in oil states, there are two exceptions:

first, timing of the regime formation relative to the oil boom (Smith 2007), and second,

the special character of revolutionary regimes. In the case of revolutionary regimes and

the regimes supported by a powerful foreign patron (such as Soviet support to the

communist regimes during the Cold War) the dynamics are expected to be different

because of the external support and because of powerful path-dependent effects of pre-

oil legacies of regime consolidation. Angola, for example, was a Soviet client state

supported by the Soviet Union and Cuba. The regime led by MPLA (People’s

Movement for the Liberation of Angola) survived to this day after winning the

protracted civil war against the UNITA (the National Union for the Total Independence

of Angola). Levitsky and Way (2013) include Angola in their list of remarkably durable

revolutionary regimes. In this war, the MPLA was supported by oil revenues, while the

UNITA benefitted from diamonds produced from areas under its control. By the early

1990s, the MPLA abandoned Marxism as official ideology. However, legacies of the

 

   

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past are still very much present, and the MPLA is still internally structured as a

communist party with party cells penetrating state structures and society. In reality,

separation between the party, government of the day and state institutions in Angola is

“blurred” (Amundsen 2014, 178). As Table 3.14 below shows, in the non-communist

party-based regimes, the parties and the regimes they founded formed before these

countries started to produce oil in significant quantities. While in Angola oil production

began in 1955 (but peaked much later, in 1980) before the MPLA rose to power, it is

well known that the MPLA developed as a leftist guerilla movement in 1956 and

participated as a party in the long-lasting civil war since the 1950s. In other words, the

MPLA regime was shaped by the powerful forces of its engagement in violent struggle

for power. In Malaysia, another non-communist dominant party regime, oil exports

began in 1910 but expanded only in the 1960s. The regime of the ruling National Front

was established in 1957 prior to the oil boom in Malaysia where oil production peaked

only in 1984. Finally, in Tunisia the regime of the Neo-Destour Party (later renamed

into the Rassemblement Constitutionnel Démocratique, RCD), which formed in the

1920s by Tunisian nationalists, was established in 1956, at least a decade before Tunisia

had its oil boom (1966-1974, peaked in 1980).

Except for these few cases of party-based regimes where regimes consolidated

in revolutionary or nationalist movement often prior to the oil boom, oil is closely

linked to personalism.

Table 3.14. Oil production years and type of authoritarianism

Regime Regime

type Year regime established Year of Start of Oil

Peak oil income

per capita Albania 44-

91 party-based

1944, communist Party of Labour 1973 (Ross)

636.19 (1979)

Algeria 62-92

party-military 1962, FLN, military 1958 (production began,

EIA) 2462.68 (1979)

Algeria 92-NA military 1992, military 1958 (EIA)

3721.08 (2008)

Angola 75-NA

party-based 1975, MPLA

1955 (EIA)

702.16 (1980), 4063.83 (2008)

Argentina 66-73 military 1966, military 1971 (Ross)

134.07 (1973)

Argentina military 1976, military 1971 737.09

 

   

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76-83 (1980)

Azerbaijan 93-NA personal 1993, Aliyev family 1991, also 1846 (EIA),

Soviet 4372.79 (2008)

Bahrain 71-NA monarchy 1783, Al Khalifah

family 1934 (other)

7584.27 (1980), 8442.71 (2005)

Bolivia 71-79

military-personal

1971, military, Banzer 1972 (Ross)

381.26 (1982)

Cameroon 83-NA personal 1983, Biya

1977 (1979) (Ross)

361.41 (1985), 183.05 (2008)

Chad 90-NA personal 1990, Déby 2004 (Ross) 411.61 (2008)

Chile 73-89 military-personal

1973, military, Pinochet 1970 (Ross)

237.59 (1981)

Congo-Brz 68-91

party-military

1968, PCT Party, military 1957 (other), 1973 (Ross)

1257 (1983)

Congo-Brz 97-NA personal 1997, Sassou

Nguesso 1957 or 1973 2952.52 (2008)

Ecuador 72-79 military 1972, military 1973 (Ross)

965.35 (1979)

Egypt 52-NA

party-personal-military

1952, NDP, Sadat/Mubarak, military 1975 (Ross)

478.39 (1980), 504.82 (2008)

Eq. Guinea 1979-NA personal 1979, Obiang 1994 (Ross)

21682.97 (2008)

Gabon 60-NA

party-personal

1960, PDG Party, Bongo family

1956 (other), 1961 (Ross)

10836.71 (1979), 6513.78 (2008)

Hungary 47-90

party-based

1947, Socialist Workers’ Party

1974 (Ross)

285.86 (1981), 161.68 (2005)

Indonesia 66-99

party-personal-military

1966, Golkar Party, Suharto, military

1885 (EIA), 1974 (Ross)

415.15 (1980), 264.29 (2008)

Iran 79-NA party-personal

1979, sui generis, Khomeini/Khamene’i 1911 (other), 1950 (Ross)

3265.65 (1979), 2780.85 (2008)

Iraq 32-58 monarchy 1932, Hashemite dynasty 1928 (other)

8622.71 (1979)

Iraq 58-63 personal 1958, Qasim 1928 Iraq 63-68 personal 1963, Arif, Al-Bakr 1928

Iraq 68-79 party-personal 1968, Baath Party 1928

 

   

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Iraq 79-03 personal 1979, Hussein 1928 Kazakhstan

91-NA personal 1991, Nazarbayev 1911 (EIA) 3707.27 (2008)

Kuwait 61-NA monarchy 1752, Al Sabah

family 1938/ 1950s (EIA, other)

67540.64 (1979),

35131.43 (2008)

Libya 51-69 monarchy 1951, King Idris 1961 (other), exact date 25058.87

(1979) Libya 69-

NA personal 1969, Qaddafi 1961 (other), exact date 11272.51

(2008)

Malaysia 57-NA

party-based

1957, National Front (Barisan Nasional, BN)

1910 (other), 1974 (Ross), was modest, expanded only

in 1960s

739 (1984), 1683.22 (2008)

Mexico 15-00

party-based 1915 (1929), PRI

1974 (Ross), modest before 1970s, but oil producer

since 1920s 1308.24 (1982)

Nigeria 66-79 military 1966, military 1958 (other), 1971 (Ross)

1254.25 (1979)

Nigeria 83-93 military 1983, military 1958 (other), 1971 (Ross)

Nigeria 93-99

military-personal

1993, military, Abacha/Abubakr 1958 (other), 1971 (Ross)

Oman 41-NA monarchy 1749, Al Said

family 1964 (other)

9400.89 (1979),

13038.55 (2008)

Peru 68-80 military 1968, military 1974 (Ross) 418.01 (1980)

Qatar 1971-NA monarchy 1725, Al-Thani

family 1950s (other)

21638.21 (1959),

86391.45 (1979)

Romania 45-89

party-personal

1945, Communist Party PCR, Ceaușescu 1958 (Ross)

856.16 (1981)

Russia 93-NA personal 1993, Yeltsin, Putin see USSR

3863.29 (2008)

Saudi Arabia 27-

NA monarchy 1744, Al Saud

family 1938 (other)

37225.26 (1980),

14303.64 (2008)

Senegal 60-00

party-based

1960, Socialist Party of Senegal 1995 (Ross)

1253.39 (1995)

Soviet Union 17-91

party-based

1917, Communist Party

1960 (Ross), production earlier

3871.74 (1980)

Sudan 89-NA personal 1989, al-Bashir 1990s (EIA), 2004 (Ross)

434.43 (2010)

Syria 63-NA party-personal-

1963, Asad family, Baath Party

late 1960s (other), 1974 (Ross)

688.82 (1979),

 

   

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military 763.29 (2008)

Tunisia 56-NA

party-based

1956, Neo-Destour Party/RCD 1966 (other), 1974 (Ross)

631.48 (1980)

Turkmenistan 91-NA

party-personal

1991, Niyazov/Berdimuhammedov 1991, also Soviet

6038.32 (2005)

United Arab Emirates 71-

NA monarchy

1971, Sheikh Zayed/Sheikh Khalifa bin Zayed 1962 first oil export (BBC)

74616.08 (1974),

26768.22 (2008)

Uzbekistan 91-NA

party-personal 1991, Karimov 1991, also Soviet

968.73 (2005)

Venezuela 48-58

military-personal

1948, military, Pérez Jiménez

1914 (other)

2211.77 (1957), 6294.62 (1979)

Venezuela 05-NA personal 2005, Chávez 1914

3843.1 (2008)

Yemen 78-NA personal 1978, Saleh

1986 (other), 1988 (Ross)

1022.47 (1993), 804.14 (2005)

Notes: Autocracies only; NA=still in power as of 2010; Oil income is measured in per capita dollars; Start of Oil -the year in which oil income hits the 100 dollar per capita threshold or alternatively as the first year in which oil production starts. Sources: Ross 2013; EIA for various years and countries (http://www.eia.gov/), websites: http://countrystudies.us/persian-gulf-states/37.htm, http://en.nioc.ir/Portal/Home/, http://countrystudies.us/persian-gulf-states/14.htm, http://countrystudies.us/iraq/53.htm http://www.businessinsider.com/libya-oil-exports-2011-2, http://www.bpmb.com.my/gui/pdf/annual_report/2011/20.pdf, https://history.state.gov/milestones/1937-1945/mexican-oil, http://www.nnpcgroup.com/NNPCBusiness/BusinessInformation/OilGasinNigeria/IndustryHistory.aspx, http://www.fundinguniverse.com/company-histories/petroleum-development-oman-llc-history/, http://www.washingtonpost.com/wp-srv/world/countries/tunisia.html, http://www.bbc.com/news/world-middle-east-14704414 http://www.opec.org/opec_web/en/about_us/171.htm, http://www.mom.gov.ye/en/    The case of scrapping term limits

Removing term limits can be used as a good indicator of the personalization of power.

Hadenius and Teorell (2007), for example, used the leadership turnover as a measure of

the degree of personalism in their study. It seems the tendency to remove limits on

presidential terms can be a more accurate measure of personalization because leaders of

dominant parties can also have long duration in office. Below I argue that presidents in

oil-rich states are more likely to scrap presidential terms than leaders in non-oil states

because of the political incentives oil generates (Andersen and Aslaksen 2010). The

evidence presented below is based on a selective range of observations and should be

taken as suggestive, rather than conclusive.

 

   

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Within the last decade, several presidents, especially in resource-reliant

countries, have attempted to reshape their countries’ constitutional design for their own

benefit by removing presidential term limits.13 It appears that these attempts have been

largely successful in allowing incumbents to extend their term in power. In February

2009, Venezuelan President Hugo Chávez won a referendum that allowed him to run

for re-election after his tenure expired in 2012 (Forero 2009). Azerbaijan eliminated

presidential term limits in March 2009. Although reasons for lifting term limits may

vary across states, and although the phenomenon is not unique to resource-abundant

states, the logic seems to be the following.

In resource-rich countries in the developing world, access to state resources is

also a source of enormous benefits. In governance systems in which the state functions

as a “cover” for an extended network of patronage and clientelism, rents obtained from

multiple rent-generating opportunities provide the material underpinning for the entire

clientelist system, at the apex of which is the president – the patron-in-chief. Over time,

as the spoils from commodity exports increase, the quantities of rents available to the

president for distribution also increase. The president uses material rewards, drawn from

large rents and other forms of rent-seeking, to benefit his coterie, cronies, family, and

friends. Other social groups may also benefit from selective dispersal of patronage (e.g.

job positions in the government sector, subsidies on public services) and in exchange

offer their political loyalty.

This submission ultimately dampens societal pressures for political participation

and retards democratization. The leader’s inner circle and cronies who benefit most

from windfall gains, associated corruption and rent seeking develop vested interests in

sustaining their patron’s hold on power. Thanks to the multiple sources of rents that

access to state resources provides, the ruler maintains his support base and consolidates

his power. Since the system is built on personal relations and depends on the ruler, it is

in everyone's interest to support the strongman’s uninterrupted stay in office. Nothing

less than the survival of patronized now depends on the survival of the patron.

The leader, in turn, uses his incumbency advantage, most importantly the control

of state resources and administrative apparatus, to remove previously adopted

limitations on presidential powers. Normally, when the second term starts or some years                                                                                                                13 This sub-section was first published as: “End of Term Limits: Monarchical Presidencies on the Rise”, Harvard International Review, February 28, 2009, http://hir.harvard.edu/archives/1823

 

   

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before the term comes to an end, the incumbent ruler and his innermost circle start to

think of ways to avoid a succession crisis that would put the system at risk of collapse.

Hence the elimination of term limits.

Although the non-reelection rule does not guarantee democracy, ending term

limits erodes one of the essential pillars of presidentialism – a fixed period of time in

office. It makes it harder for opposition candidates to compete for the presidency,

leaving almost no chance for meaningful political change. Deprived of opportunities to

participate in government, the opposition might, if possible, resort to violence to

compete for political power. Overall, this might endanger political stability with

detrimental effects on the prospect for democratic change.

Unrestricted presidencies are especially dangerous if they emerge in states with

a rentier economy. Exempted from the obligation to step down, the president would

solidify his governing coalition, extend his control of the state and media, and

circumscribe political competition. By taking advantage of enormous natural resource

revenues, it is easy to manipulate public opinion, gain electoral support, and garner

political legitimacy. The injection of populist rhetoric and the introduction of a

personality cult around the leader can also help. In fact, the development of the

personality cult is especially ironic since these leaders adopt irresponsible, politically

motivated policies that lead to unsustainable development and the misallocation of

public funds. In institutionally weak environments, limitless presidential power can also

translate into policies geared toward weakening civil society and stifling dissenting

voices. With extraordinary profits available, the government can also strengthen its

repressive capacity to obviate any future attempts to overthrow the regime. With so

large a source of wealth, the government strengthens and expands. It can, however, use

its strength to curtail the formation of interest groups, insulate itself from social

demands, and hold onto power to serve a narrow elite interest.

The referendum held on March 18, 2009 amended the 1995 Azerbaijan

Constitution and lifted restrictions limiting presidential terms to two consecutive five-

year terms. In effect, the amendment meant more than just a formal modification in the

law. In reality, it weakened the already distorted mechanism of checks and balances

granting unlimited powers to the head executive and to continue in office as long as he

sees fit.

 

   

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Azerbaijan failed to develop strong institutional restraints like an effective

legislature, an independent courts system, a strong civil society, and a free media to

avert the negative consequences of term limit removal. The constitutional change only

helped the consolidation of a super-presidential system sustained by political clientelism

and misappropriation of public resources, and undermined the potential of this

increasingly authoritarian state to democratize.

The trend towards a stronger executive is not unique to Azerbaijan. Similar

constitutional manipulations have been carried out elsewhere, but a number of these

changes took places in states which rely on petroleum revenues or other forms of rents.

The post-Soviet region abounds with examples of strong presidents who eliminated

term limits to prolong their hold on power. The 2004 referendum in Belarus, whose

state elites depend heavily on Russian oil and gas transit, lifted the two-term limit on

President Lukashenko, who has been in power since 1994. In Central Asia, Uzbekistan

held two referendums in 1995 and 2002 that extended President Islam Karimov’s term.

The referenda were used to justify his third term. In 2007, Kazakhstan’s parliament

amended the constitution to lift the term limit on the tenure of President Nazarbayev,

who has been in power since the country’s independence in 1991. The change only

affects Mr. Nazarbayev and is not supposed to apply to future presidents. In

Nazarbayev’s Kazakhstan, politics is still run on informal networks and the key criteria

for promotion in the public sector is personal loyalty to the president (Kusznir 2012,

114). In natural gas-rich Turkmenistan, the People’s Council abolished term limits in

1999 and announced that the now defunct ruler, Saparmurat Niyazov

(“Turkmenbashi”), would be “president for life”.

Similar constitutional engineering is not confined to post-Soviet Eurasia. In

Venezuela, a founding member of OPEC, Chávez won approval in the February 2009

referendum for a constitutional amendment that enabled him to run for the presidency

when his term ended in 2012, which he eventually won. A similar constitutional change

was rejected in a previous referendum held in December 2007. In April 2008, President

Paul Biya of Cameroon, a commodity-based African economy, had parliament pass a

constitutional bill abolishing a two-term limit restriction; his party dominated the

parliament. The updated legislation made it possible for Mr. Biya to extend his 25-year

rule over this West African nation. In November 2008, President Abdelaziz Bouteflika

 

   

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of Algeria also had his two-term restriction abolished. Mr. Bouteflika became president

of this major energy-exporting country in 1999 and was re-elected in a landslide victory

in 2004. After the change, he can run for a third time in the presidential race scheduled

for April.

Presidential term limits are crucial institutional guards against executive

monopolization and abuse of power. Scholars of Latin America have argued that the

preference for presidential over parliamentary government has contributed to weak

horizontal accountability that has allowed the executive to concentrate power to an

extreme degree. Consequently, this preference has made democratic consolidation in

this region especially arduous. In the post-communist context, empirical research

suggests that the initial choices in favor of parliamentary government helped

democratization. It is therefore unsurprising that most of the Eastern European

democracies have parliamentary (e.g. the Czech Republic, Hungary) or mixed forms of

government (e.g. Romania). In contrast, states that, like Russia, opted for stronger

presidents have suffered from super-presidentialism, a political system characterized by

the extreme concentration of power in the executive and near-absent checks and

balances. In the post-Soviet region excluding the Baltic states, Moldova among the few

boasts a parliamentary system in the largely presidentialist post-Soviet world: since

2001 the president of Moldova is elected by the 101-member parliament. Although not

a completely democratized polity, Moldova has maintained higher levels of pluralism

than many other states of the former Soviet region.

Azerbaijan’s post-independence elections, except for the presidential election of

the brief democratizing moment of 1992, have all been deemed short of international

standards. The lack of alteration in power testifies to the incumbent's unwillingness to

move out of the office and allow for power rotation. Moreover, from the early 2000s

Azerbaijan has been evolving along the lines of a petro-state in which politicians use

their control of the state, especially over huge petroleum revenues, to benefit in their

private interests. Oil and gas exports have enriched the government’s coffers and

contributed to regime stability, allowing the government – through patronage, public

spending and rent-seeking – to buy public support and to keep the society unmobilized

and unorganized. Examples vary from spending petro dollars on expanding the public

sector to wasteful spending on popular and highly visible projects to financing mega-

 

   

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infrastructural projects across the country. Petroleum has already made the incumbent

authorities rich and strong enough to pre-empt any challenge to their hold on power.

The lifting of term restrictions and granting extra powers to the president undermined

the remainder of Azerbaijan’s potential to democratize.

3.5. Conclusion My study results have three implications for current and future research on oil,

authoritarianism and democratization. First, my findings indicate that not a single

personal authoritarian regime ever transitioned to democracy. Change in personalist oil-

based regimes typically occurred from the outside. Gadhafi’s removal from power in

2011 is one recent example; the overthrow of the Saddam Hussein in Iraq in 2003 after

the military intervention of the U.S. troops is another. This may imply that the poor

record of democratization in oil states in general may be due to an “elective affinity”

between oil and personal rule.

A recent study by Wright et al. (2012) shows that oil has little effect on

transitions to democracy, but has a strong effect on autocratic survival by suppressing

the emergence of a new dictatorship:

“Oil wealth and long-lasting dictatorship go hand in hand – as in Malaysia, Saudi Arabia, and the United Arab Emirates – not necessarily because oil creates barriers to democracy (after all, Norway’s got oil too) but because it prevents new dictators from seizing power. In other words, increases in oil rents stabilize dictatorships by suppressing challenges from future autocrats, not by quelling democratic opposition movements.” (Frantz et al. 2014).

My analysis shows that different results can be obtained if you enter the type of

authoritarian rule into the equation. While oil stabilizes all dictatorships (except

military), its effects on democratic transitions might be moderated by the authoritarian

institutions, and oil may interact differently with different institutions. The fact that oil

prevented democratic transitions in personalist regimes, but not necessarily in other

types of autocracy (after all, party-based regimes in Mexico and Indonesia did

democratize), suggests that oil and personalist institutions are positively related.

 

   

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3.6. Appendix: List of oil-producing states and their respective regime type

Country Years in power Duration Regime type Oil income per capita (2010)

Albania 1944-91 47 party 233* Algeria 1962-92 30 party 538.26 Algeria 1992-NA 18 military 2092.73 Angola 1975-NA 35 party 2985.54

Argentina 1966-73 7 military 134.07 Argentina 1974-76 3 democracy 331.11 Argentina 1976-83 7 military 531.97 Argentina 1984-NA 27 democracy 629.75 Azerbaijan 1993-NA 17 personal 3718.5

Bahrain 1971-NA 39 monarchy 2739.36 Bolivia 1971-79 8 military 329.4 Bolivia 1983-NA 28 democracy 335.53 Brazil 1985-NA 6 democracy 319.43

Cameroon 1983-NA 27 personal 113.72 Chad 1990-NA 20 personal 320.98 Chile 1973-89 16 military 140*

Colombia 1958-NA 52 democracy 592.64 Congo-Brz 1968-91 23 party 719.77 Congo-Brz 1992-97 5 democracy 693.22 Congo-Brz 1997-NA 13 personal 2482.11

Croatia 1992-NA 19 democracy 161.73 Ecuador 1972-79 7 military 965.35 Ecuador 1979-NA 31 democracy 974.7 Egypt 1952-NA 58 party 332.6

Equatorial Guinea 1979-NA 32 personal 13997.13 Gabon 1960-NA 50 party 4880.41

Hungary 1947-90 43 party 107.79 Hungary 1990-NA 20 democracy 105.5* Indonesia 1966-99 33 party 230* Indonesia 1999-NA 11 democracy 176.74

Iran 1979-NA 31 party 2043.28 Iraq 1932-58 26 monarchy 628.04 Iraq 1958-63 5 personal 658.92 Iraq 1963-68 5 personal 646.5 Iraq 1968-79 11 party 8622.71 Iraq 1979-03 24 personal 665.8

Kazakhstan 1991-NA 19 personal 3025.83

 

   

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Kuwait 1961-NA 49 monarchy 24685.85 Libya 1951-69 18 monarchy 7430.87 Libya 1969-NA 41 personal 8162.1

Malaysia 1957-NA 53 party 983.5 Mexico 1915-2000 85 party 550.38 Mexico 2000-NA 10 democracy 736.51 Nigeria 1966-79 13 military 1254.25 Nigeria 1979-83 4 democracy 432.31 Nigeria 1983-93 10 military 186.51 Nigeria 1993-99 6 military 151.07 Nigeria 1999-NA 11 democracy 509.77 Oman 1941-NA 100 monarchy 10755.46 Peru 1968-80 12 military 418.01 Peru 1980-92 12 democracy 213* Peru 1910-NA 9 democracy 146.63 Qatar 1971-NA 40 monarchy 28154.26

Romania 1945-89 44 party 229.87 Romania 1990-NA 20 democracy 195.14 Russia 1993-NA 17 personal 2672.29

Saudi Arabia 1927-NA 83 monarchy 9813.87 Senegal 1960-2000 40 party 864.26

Soviet Union 1917-91 74 party 1305.71 Sudan 1989-NA 21 personal 434.43 Syria 1963-NA 47 party 590.16

Thailand 2007-NA 3 democracy 188.74 Trinidad and

Tobago 1961-NA 50 democracy 7327.15

Tunisia 1956-NA 54 party 262.85 Turkmenistan 1991-NA 19 party 2423.35 United Arab

Emirates 1971-NA 39 monarchy 10849.52

Uzbekistan 1991-NA 19 party 391.28 Venezuela 1948-58 10 military 2136.52 Venezuela 1958-05 47 democracy 2945.32 Venezuela 2005-NA 5 personal 2517.18

Yemen 1978-NA 32 personal 519.17 Note: *For Albania, Indonesia and Peru, the figures are the averages for the 1980s, for Chile- the average for 1973-89, for Hungary - the average for 2000-10. Source: from dataset, regime categorizations are from the GWF data (http://sites.psu.edu/dictators/); oil data from Ross (2013)

 

   

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Chapter 4. Oil, Personalism and Regime Stability in Azerbaijan

Azerbaijan illustrates the tendency of oil to reinforce personalism. The regime that

emerged after a short and unsuccessful attempt to transition to democracy in 1992-1993

was described as personalistic, neopatrimonial and even sultanistic (Guliyev 2005). The

most striking development was that with the start of an oil boom in 2003-2004, the

leadership has become even more discretionary as the role of parliament was weakened,

the political opposition was denied access to policymaking, and all independent centers

that could incubate opposition were eliminated. The control of the oil revenue flows via

the national company and the state oil fund was tightly controlled by the president and

patronage networks have expanded. In the following chapter, I show that as oil

windfalls were flooding the Azerbaijani state’s coffers the personalism of the regime

has increased. A remarkable stability of the regime for the last 20 years evidenced by

the lack of coups or any major threats to the regime can be explained by the symbiosis

between the oil rents, under the control of the ruling elite, and the regime’s strong

sultanistic tendencies. As a result, the prospects for democratic change look very bleak

as the ruling regime elite is “sufficiently monolithic and does not have any serious

groups able to challenge the First Person from the inside” (Abbasov 2011, 121).

4.1. Introduction

Azerbaijan was a country of political instability as it gained independence from the

Soviet Union in 1991. Following a series of leadership changes during 1991-92, the

leader of the Popular Front, Abulfez Elchibey, won Azerbaijan’s first democratic

presidential elections in 1992. However, the devastating war with Armenia, the

government’s inability to exercise effective control over the territory and a Russian-

backed coup by a rebel army commander forced the Elchibey government to step

down.14 The collapse of the Popular Front government led to a shift of power to Heydar

Aliyev, who previously served as First Secretary of the Azerbaijan Communist Party

from 1969 to 1982 and as a member of the Politburo and First Deputy Chairman of the

Council of Ministers of the Soviet Union (1982-7). During his presidency (1993-2003),

                                                                                                               14After losing power in 1993, the Azerbaijan Popular Front split into several smaller opposition parties (see Heinrich, 2010).

 

   

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President Aliyev ensured political order and peace, but suppressed political pluralism.

In the political system crafted by Aliyev political power was both de facto and de jure

(the 1995 constitution) concentrated in the executive branch.

Ilham Aliyev became president of the country in 2003, shortly after his father’s

death. The father-to-son transfer of power was carefully managed and successfully

implemented. With regard to the events of 2003, the Polity Project notes that “executive

recruitment in Azerbaijan has taken on the attributes of a modern-day dynastic system”

(Polity IV Azerbaijan 2008; also see New York Times 2003). On becoming president,

Ilham Aliyev took over the highest position of authority, not only in the formal

hierarchy but also in the informal network of competing elites. Having kept in place

many members of his father’s elite, the young leader needed to assert control over the

political establishment – including the ruling New Azerbaijan Party (YAP) – dominated

by an entrenched old guard.15 The period immediately preceding and following Ilham

Aliyev’s re-election for a second term in October 2008 was marked by further steps

towards the consolidation of the authoritarian regime established by his father. Among

other things, this included a measure that enabled the young president to concentrate

even more power in his own hands. In March 2009, a constitutional referendum

approved the removal of term limits on the presidency, a juridical restriction that would

have disqualified the current president from running in the next presidential election in

2013 had it not been lifted. The abolition of term limits was also meant to prevent any

elite challengers from standing for the presidency (Economist Intelligence Unit 2010b).

Azerbaijan’s politics has been elite-dominated.16 The conventional approach to

elite analysis as applied to Azerbaijan has for a long time argued that the country is

governed by a strong leader and several “clan” networks. I begin by outlining this

                                                                                                               15 Reportedly, Aliyev’s initial intention was generational change within the elite, but this met with opposition from the old guard members of the elite (Ismailzade 2004). A US Embassy cable reported that “Aliyev’s cabinet has changed very little over the years, with few ‘reformers’ brought in or remaining in power” (US Embassy cable, President Ilham Aliyev – Michael (Corleone) on the outside, Sonny on the Inside, by Donald Lu, 18 September 2009, available at http://wikileaks.ch/cablegate.html, accessed 7 December 2010). 16 For the purposes of this study, I use the term ‘elite’ to refer to “persons who are able, by virtue of their authoritative positions in powerful organizations and movements of whatever kind, to affect national political outcomes regularly and substantially” (Higley and Burton 1989, 18). Here I focus on the political elite and, in particular, the most powerful people at or near the top of the ‘pyramid of power’ (Putnam 1976, 14), although recognizing the difficulty of separating the political elite from the remaining elites in nondemocratic polities (Blondel and Müller-Rommel 2007, 824).

 

   

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popular perspective. In the next section I use the available evidence to examine the

extent of power concentration, the character of the public administration and the

possibilities for patronage.17 I then turn to the elite structure and its composition, paying

special attention to the internal dynamics – that is, patterns of relations between the

ruler and groups that constitute the ruling elite. Finally, I discuss how the nature of the

country’s political economy, dominated by the oil sector and overly dependent on

petroleum rents, has made it possible for Azerbaijan’s long-serving rulers to sustain the

vast patronage network on which the incumbent regime is based.

4.2. Perspectives on Azerbaijani elites and politics

The prevailing approach to the analysis of the structure of power elites in Azerbaijan

postulates that after his comeback to power in 1993 Heydar Aliyev put his associates,

supporters and friends in positions of power in exchange for their loyalty. Many of

these appointees were erstwhile Soviet nomenklatura cadres (De Waal 2003, 27;

Cheterian 2010, p. 103). It is also believed that associates of these individuals constitute

powerful elite groups, generally referred to as regional ‘clans’ (Kechichian and Karasik,

1995; Avioutskii, 2007; Gaman-Golutvina, 2007) or networks that combine elements of

clan and patronage (Rasizade, 2004; Bunce and Wolchik, 2008; Gojayev, 2010). The

International Crisis Group (ICG 2004, 9) describes this system as “a pyramidal web

[with the president and his family at the apex] of patronage and often-institutionalized

corruption where regional and clan influences remain strong”. Guseynov (2004) traces

the roots of this structure of power, which he calls the ‘state-tribal machine of rule’,

back to Soviet times, when Heydar Aliyev was First Secretary of the Azerbaijani

Communist Party.

The ‘clan’ groups are typically associated with particular regions. Regional

‘clans’ favour natives from their regions for public service jobs, considering them more

trustworthy. The Nakhchivanis, the Yerazis (ethnic Azerbaijanis originating from

Armenia) and the Kurdish groups are the most commonly identified ‘clans’ within the

                                                                                                               17 Considering that reliable evidence on Azerbaijani elites is in short supply, I used secondary sources to identify key members of the political elite. I also found the US Embassy cables released by WikiLeaks that revealed details about the president and members of his entourage useful reading. This strategy is not without weaknesses, but nevertheless I subscribe to a BBC reporter’s apt observation that, “[t]he Azeri elite keep themselves to themselves, but most people know who they are” (Esslemont 2010).

 

   

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ruling elite.18 Many of the appointed leaders representing these networks have kept their

position in the elite under the young president.

Most existing accounts of the Azerbaijani elite also point to presidential

patronage as an essential element in this type of authority structure (Wheatley and

Zürcher, 2008; Aliyeva, 2009; Guliyev, 2009a; International Crisis Group, 2010a).

Patronage is used by the president to buy loyalty and to accommodate rival factions

within the elite. Corruption is considered another pillar of this system of governance,

which allows the ruler to expand his patronage networks (ICG 2010a, 11). Clan and

corruption, when combined, operate as a ‘clan-franchise’ system, in which each major

clan oversees and extracts profits from one or several ‘corruption profit centers’ (such

as ministries, major agencies, state monopolies) acquired as ‘franchises’ from the

presidential apparatus (Johnson 2006, 4-7).

4.3. Evidence

4.3.1. Power concentration

The current Azerbaijani regime is based on personal rule characterized by a high degree

of power concentration, neopatrimonial public administration and the use of a patron-

client network as the principal institutional mechanism for wielding political power.

With regard to the extent of power concentration, there is no balance in the

distribution of power between the executive office and the legislature in Azerbaijan. In

fact, power is highly centralized and concentrated in the presidential office, or rather in

the person of the president. Although the constitution of 1995 establishes the division of

powers as the ‘basis for state’, an effective separation of powers between different

branches is not implemented in practice (Bertelsmann Stiftung 2010, 5). The Milli

Majlis (parliament) lacks autonomy, has either very limited or no legislative oversight

and acts merely as a rubber stamp for bills that originate from the executive, especially

from the presidential apparatus. The judiciary system is not sufficiently developed and

courts are not independent.

                                                                                                               18 Kamaladin Heydarov (minister of emergencies) and Ramiz Mehdiev (head of the presidential administration), Jalal Aliyev (president’s uncle and parliament member), and Baylar Eyyubov (head of the presidential security guard), respectively, lead these three ‘clans’.

 

   

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4.3.2. Public administration, patron-client networks and patronage

possibilities

Extreme centralization of power runs parallel with the high degree of its

personalization. Many senior positions in the state bureaucracy are filled by loyal

appointees of the late President Aliyev. An independent report commissioned by

UNDP-Azerbaijan (United Nations Development Programme) finds that many of

today’s senior public servants, who assumed positions in the 1990s, in fact began their

careers in the 1970-80 period, at a time when Heydar Aliyev was responsible for

bureaucratic appointments and promotions (Rohozinski 2005, 12). The report also

suggests that the personalization of state administration can actually be positive as it

promoted intra-elite coordination and political stability:

While this personalization and centralization of power may be unseemly from a ‘bureaucratic’ point of view, the administration’s personalized ties to Heydar Aliyev played an important role in the re-stabilization of Azerbaijan following the turmoil of the 1992-95 period. Stability was ensured by a system of governance that favoured loyalty over pluralism, and where authority was highly centralized on the executive branch, and specifically within the office of the President. Heydar Aliyev’s personal authority and loyal following within the public service ensured cooperation and coordination within government institutions, while personal loyalties facilitated cooperation amongst the political leadership. (Rohozinski 2005, 12)

As a useful approach to analysing the structure of authority in Azerbaijan, I propose to

imagine a series of interconnected patron-client circles, with the president and his

family at the centre of the network.19 As the ultimate decision-maker, the president

determines how to dispense patronage, such as public sector jobs and all the benefits

and privileges that accompany public office and access to state resources. According to

Pleines (2012), this role of president as “bribe arbiter” helped mitigate potential power

struggles between rent-seeking groups and ensured the president’s firm grip on power.

Although it is difficult to measure patronage directly, it is possible to estimate

the scope of patronage possibilities. Here I use two measures to evaluate the extent of

patronage possibilities in Azerbaijan20: the share of public sector employment in total

                                                                                                               19 Snyder (2006) emphasizes that in systems of personal rule a network of patron-client relationships serves as the ‘infrastructure of political power’. For recent discussions of clientelism and patron-client relations, see Hicken (2011) and Heinemann-Grüder (2012). 20 The size of the public sector (wages and/or personnel) is the most commonly used proxy for measuring clientelism and patronage (see Hicken, 2011, 304-305).

 

   

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employment and the size of the public sector as a percentage of the population.21 For

comparative purposes, I also provide the relevant statistics for neighbouring Armenia

and Georgia. As Table 4.1 shows, despite a general shrinking of public sector

employment in all three countries between 1995 and 2008, Azerbaijan has been able to

keep a larger

Table 4.1. Share of public sector employment in total employment in Armenia, Azerbaijan and Georgia (percentage) 1995 1996 1997 1998 1999 2000 2001 Armenia 49.8 38.9 37.1 30.3 27.4 26.5 24.8 Azerbaijan 56.1 51 46.5 46.2 36.2 33.6 33.4 Georgia 42.4 30.1 28.7 34.6 31.3 25.1 N/A 2002 2003 2004 2005 2006 2007 2008 Armenia 25.8 23.3 21.1 19.8 19.6 19.3 18.8 Azerbaijan 32.0 31.5 31.7 31.9 32.0 36.3 36.4 Georgia 23.5 24 22.8 23 20.6 N/A N/A Source: LABORSTA Database, Public Sector Employment Statistics, International Labour Organisation, available at http://laborsta.ilo.org/, accessed 1 December 2010. proportion of its employed population in the public sector and, since 2007, has even

been able to reverse the downward trend. While Azerbaijan’s public sector in general

became smaller in size, the share of public sector employment in total employment

never fell below the level of 30 per cent. Whereas public employment in the period

covered shrank by more than 60 per cent in Armenia and halved in Georgia, in

Azerbaijan this figure is less dramatic: its public sector contracted by a third.

Table 4.2. Size of the public sector in Armenia, Azerbaijan and Georgia (in thousands) Public sector1 Population2 Public sector as percentage of the

population Armenia 210.3 3226.9 6.5 Azerbaijan 1476.4 8032.8 18.4 Georgia 360.3 4435.2 8.1 1Figures are the most recent available (2008); the figure for Georgia is for 2006. 2Population figures are for 2000, based on data from the respective countries’ state statistical offices: State Statistical Committee of the Republic of Azerbaijan, National Statistics Office of Georgia and Statistical Yearbook of Armenia (2009). Source: LABORSTA Database, Public Sector Employment Statistics, International Labour Organization, available at http://laborsta.ilo.org/, accessed 1 December 2010.

                                                                                                               21 Public sector employment is defined by the International Labour Organisation (ILO) as “all employment of general government sector […] plus employment of publicly owned enterprises and companies”. Relevant data are provided by the national statistical institutes of the ILO member states (see Hammouya, 1999).

 

   

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Moreover, in 2008 Azerbaijan had a much larger public sector relative to the size of its

population than Armenia and Georgia, whose populations are much smaller. At that

time, 18.4 per cent of the Azerbaijani population worked in the public sector, compared

to only 6.5 per cent in Armenia and about 8 per cent in Georgia (see Table 4.2). The

availability of enormous possibilities for patronage and the fact that Azerbaijani leaders

have maintained a large public sector, which they and their senior officials have readily

staffed with their ‘own people’, suggest that patronage plays a crucial role in the

functioning of the Aliyev regime.

4.4. Elite Composition

The top tier of the ruling elite consists of the following three groups: the ‘old guard’, the

‘oligarchs’ and the ‘family’ (ICG 2010a). Table 4.3 profiles the key representatives of

these powerful groups. As Table 4.3 shows, the governing elite encompasses some

members of the Aliyev family, namely his wife (Mehriban Aliyeva) and her family (the

Pashayevs), and the leaders of several notable factions who occupy top

Table 4.3. The composition of the Azerbaijani elite, circa 2009-10

Political position Business interests Presidential family

Regional network

The ‘old guard’ Garalov, Zakir Prosecutor general (since

2000) N/A No —

Mehdiyev, Ramiz Chief, presidential administration (since 1995)

N/A No Nakhchivani

Usubov, Ramil Minister of the interior (since 1994)

N/A No —

The ‘oligarchs’ Abdullayev, Rovnag

President, SOCAR (since 2005)

SOCAR and subsidiaries No Nakhchivani

Heydarov, Kamaladdin Heydarov family

Chairman, state customs committee, (1995-2006); Minister of emergencies (since 2006)

Food processing, agriculture, construction business, real estate, chemicals, textiles, tourism, banking, insurance

No Nakhchivani

Mammadov, Ziya Mammadov family

Chairman of Azerbaijan state railway administration (1996-2002); Minister of transportation (since 2002)

Passenger transport and cargo shipments, construction business, insurance, banking

No —

The ‘family’

 

   

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Aliyeva, Mehriban (née Pashayeva) Pashayev family1

President, Heydar Aliyev foundation (since 2004) MP, Milli Majlis (since 2005)

Construction business, real estate, insurance, financial sector, telecommunications, cosmetics

Yes Baku/Absheron

Aliyev, Jalal MP, Milli Majlis (since 1995)

N/A Yes Yerazi

Eyyubov, Baylar Chief, president’s personal security guard (since 1993) Deputy chief, special state protection service (since 2003)

Series of enterprises in Ganja area, construction business, monopoly on banana imports

Yes Kurdish/ Nakhchivani

Talibov, Vasif Head, Nakhchivan Autonomous Republic (since 1995)

All major businesses in Nakhchivan

Yes Nakhchivani

1Other influential members of the Pashaev family are Nargiz Pashaeva (the First Lady’s sister), who heads the Moscow State University’s Baku branch; Arif Pashaev (the First Lady’s father), who is the rector of the National Aviation Academy; and Hafiz Pashaev (the First Lady’s uncle), who is a deputy foreign minister and the rector of the Azerbaijan diplomatic academy. The Pashaevs are also believed to have control over the ministries of culture and tourism, youth and sports, health and education. Sources: Biographical database Adam.az, available at http://adam.az/; ICG 2004, 2010a; Dilavarli, 2009; Norwegian Helsinki Committee, 2009; Gojayev, 2010; ‘K. Heydəәrovun oğulları böyük biznesdəә’, Azadliq.org – RFE/RL Azerbaijani Service, 17 February 2010, available at: http://www.azadliqradiosu.az/content/article/1960290.html, accessed 25 June 2010; Esslemont, 2010; Ismayilova, 2011a; the US Embassy cables released by WikiLeaks (available at http://wikileaks.ch/cablegate.html): ‘Azerbaijan: Who owns what? Part 1 – the First Lady’s family’ by Donald Lu, 27 January 2010; ‘Azerbaijan: Who owns what? Vol. 2 – the Minister of Emergency Situations, beluga caviar, and fruit juice’ by Donald Lu, 25 February 2010; ‘President Ilham Aliyev – Michael (Corleone) on the outside, Sonny on the Inside’, by Donald Lu, 18 September 2009, accessed 7 December 2010. positions in the government and other state institutions. The influence of elite members

is measured by their proximity to the president, as the distribution of power among the

clientelist networks radiates from him.

These networks are not necessarily tied by bonds of kinship, as the fourth

column in Table 4.3 demonstrates, and therefore the term ‘clans’ may not be the most

appropriate way to describe them.22 Considering their instrumental character, these

patron-clientelist networks are organized around access to and distribution of material

resources which are exchanged for political support and loyalty. However, given that

political clientelism tends to promote “loyalties to kith and kin” (Van de Walle 2001,

119), some of these networks are in fact extended families and/or promote members of a

privileged geographic descent. Groups within the elite are linked to each other through

clientelism, but these ties are quite often cemented through marriage and extended

family connections. For example, Vasif Talibov, the long-serving head of the

Nakhchivan Autonomous Republic who controls almost the entire economy of that                                                                                                                22 Schatz (2012) defines a clan as ‘an identity group or network of individuals linked through demonstrable kinship’ (my emphasis). Sidikov (2004) proposes instead the term ‘regional grouping’, understood as a ‘strategy to capture resources’.

 

   

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region, is the son-in-law of the niece of the late President Aliyev (Norwegian Helsinki

Committee 2009, 17).

4.5. The oil economy and rent capturing

4.5.1. Oil and the economy Azerbaijan’s economy has been traditionally dominated by petroleum. Baku is one of

the world’s oldest producers of petroleum. Oil production began here in the second half

of the 19th century. The first industrial well was drilled at Bibi-Heybat on the Absheron

peninsula near Baku in 1848. During 1899-1901, Azerbaijan was the largest producer of

oil in the world. Its output of 11.5 million tons (mt) made up more than a half of the

world’s total production (for comparison, the USA produced 9.5 mt). During World

War II, Azerbaijan contributed 63.2 percent of total Soviet oil production, but by the

end of WWII oil production declined. Between 1947 and 1963, oil production stabilized

at about 21 mt/y. In 1948, new oil deposits were discovered in the Caspian Sea shelf

(the offshore Oil Rocks deposit) and another 23 offshore deposits explored, including

Azeri-Chirag-Deepwater Guneshli and Shah Deniz (a major gas field). After WWII, the

Soviet policymakers decided to develop the oil and gas fields in Siberia which became

the priority areas for investments. By 1950, the new fields accounted for 45 percent of

Soviet oil production. As a result, in 1969 oil production in Azerbaijan SSR declined

and recession lasted until 1985. Since 1985 production stabilized at around 13 mt/y and

dropped further after independence (in 1991) reaching the lowest levels at 9.1 mt in

1996-1997 (see Figure 4.1).23

After independence, the Popular Front government of Elchibey (1992-93)

started negotiations with foreign oil companies about shared exploration of the oil and

gas deposits in the Azerbaijani section of the Caspian Sea. The government of Aliyev

continued negotiations. In September 1994, the first oil contract was signed between the

State Oil Company of Azerbaijan (SOCAR) and a consortium of foreign energy

companies. Azerbaijan is estimated to earn about $ 200 billion in total revenue given

favorable prices.

                                                                                                               23 This short historical note on oil production in Azerbaijan during the first oil boom and during Soviet times draws from Bagirov (2007) and Isayev (2008).

 

   

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Figure 4.1. Azerbaijan: Crude Oil Production, 1980-2010

(in thousand of metric tons)

Source: IMF various years, SOCAR

Today Azerbaijan’s oil reserves are estimated at 7 billion barrels (b/bbl) (1

billion tons) and 30 trillion cubic feet (Tcf) of natural gas (compare to Kazakhstan’s oil

reserves 39.8 b/bbl and Turkmenistan gas at 265 Tcf) (BP 2011; EIA 2012; AzStat).

The country’s oil and gas reserves account for 0.5 and 0.7 percent of global reserves of

oil and gas respectively. Most of Azerbaijan’s oil output (80 percent in 2010) comes

from the giant Azeri-Chirag-Guneshli (ACG) oil field. The largest natural gas deposit is

the Shah Deniz field. Oil production currently stands at 1 million barrels per day (bbl/d)

and is expected to pick by the year 2014 and then start to decline to be completely

exhausted in 20-25 years (IMF 2010).

The oil boom from around 2004 generated enormous income as can be seen

from Figure 4.2.

Azerbaijan: Crude Oil Production, 1980-2010 (in thousand of metric tons)

1.000

4.000

7.000

10.000

13.000

16.000

19.000

22.000

25.000

28.000

31.000

34.000

37.000

40.000

43.000

46.000

49.000

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

 

   

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Figure 4.2. Azerbaijan: Petroleum income per capita in US dollars

Source: Ross 2013

In the wake of Soviet collapse, Azerbaijan experienced a dramatic decline in the

economic performance, which was one of the worst even by post-Soviet standards. The

conflict in Nagorno-Karabakh aggravated economic recovery as it was a significant

drain on public finance. From 1992 to 1995, the country’s real GDP growth was

negative. In 1993, the economy declined -23.1 percent. During this time, real GDP fell

by more than 70 percent. Government revenues declined dramatically while spending

remained high due to war. As a result, large fiscal deficits accumulated during 1992-

1994. To deal with this challenge of mitigating the economic crisis and its

ramifications, the government pursued a reform program to establish basic market

institutions and partial liberalization. In the early 1995, the Aliyev government

implemented an economic stabilization reform program guided by the World Bank.

Small-scale enterprises were privatized, the fiscal system was modernized, and general

macroeconomic conditions were stabilized. GDP began to recover in 1996. But, most

important, the government promoted foreign investments in the energy sector.

Export of first “new” oil started in late 1997 through the so called “Early Oil”

Northern Route (from Baku to the Russian port of Novorossiysk on the Black Sea). The

second pipeline from Baku to Supsa on the Black Sea became operational in 1999.

Inflows from “early” oil exports, signature bonuses and foreign direct investments

brought in much-needed foreign exchange. Net foreign exchange earnings were

0  500  1000  1500  2000  2500  3000  3500  4000  4500  5000  

1992   1994   1996   1998   2000   2002   2004   2006   2008   2010  

Petroleum  Income  Per  Capita  (Ross)  

 

   

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substantial already in 1996-1999. The launch of the Azeri-Chirag-Guneshli in 1997

marked the beginning of the rise in oil output (Aliyev 2010). First post-Soviet oil was

produced from an offshore platform on November 7, 1997 from the $ 8 billion

Azerbaijan International Operating Company (AIOC) to be transported to Novorossiysk

on Russia’s Black Sea.

On May 25, 2005 the presidents of Azerbaijan, Georgia, Turkey and Kazakhstan

met at the Sangachal terminal near Baku to inaugurate a third pipeline to carry oil from

the ACG oil field (and since 2008 Kazakh oil from the Tengiz oil field) through Tbilisi

to the Turkish port of Ceyhan on the Mediterranean. The Baku-Tbilisi-Ceyhan (BTC)

began exporting crude in July 2006. The South Caucasus gas pipeline (Baku-Tbilisi-

Erzerum) became operational in 2006. The ACG project, the Shah Deniz project, the

BTC, and the South Caucasus pipeline attracted $25 billion in total investment as of

2008 (Aliyev 2010).

Azerbaijani politics is confined to a relatively narrow circle of powerful men for

whom political power also means access to economic wealth. It has become a common

belief that the dividing lines between politics and economics and between the public and

private spheres are blurred in Azerbaijan. Key sectors of the economy are controlled by

those who have close ties to the president and his inner circle. The second column in

Table 4.3 lists some of the enterprises and other economic assets owned or believed to

be owned by the members of the ruling elite.

Control of the country’s oil wealth and concentration of economic resources in

the governing elite is believed to be the primary contributor to the regime’s endurance

(Aliyeva 2009; Guliyev 2009a; Ahmadov 2011; Radnitz 2012). The oil and gas sector is

controlled by the president and his family (e.g. Hoffman, 1999, 13; Meissner 2012).

President Aliyev wields ultimate authority over the State Oil Company (SOCAR) and

also has unlimited power to decide on how to spend money from the State Oil Fund

(SOFAZ). Members of the Aliyev family, his associates and cronies control many

lucrative sectors outside the oil industry. These typically are large and medium-sized

enterprises in construction, infrastructure building, banking, services and other

industries. To give an example, an investigation conducted by the Radio Free Europe

(RFE)/Radio Liberty (RL) Azerbaijan Service recently revealed that Arzu Aliyeva, the

daughter of the incumbent president, has become a co-owner of Silkway Bank, a

 

   

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company belonging to the airline service conglomerate SW Holding. The acquisition of

the shares in the company was achieved through the dubious procedure of privatizing

AZAL Bank (Asadzade and Ismayilova 2010). The two daughters of President Aliyev

are also believed to own a leading telecom operator Azerfon through three offshore

companies registered under their names in Panama (Ismayilova 2011b).

A recently released US Embassy cable24 compares the situation in today’s

Azerbaijan to medieval feudalism, adding that “a handful of well-connected families

control certain geographic areas, as well as certain sectors of the economy [...] with

general agreement among leading families to divide the spoils and not disturb one

another’s areas of business or geographic control”.

Of interest also is the elite members’ interest in controlling economic areas

outside the petroleum industry. The economy of Azerbaijan generates oil rents which

are easy to capture, given the weakness of the accountability procedures. The

proliferation of elite-controlled enterprises in the construction sector suggests that elites

also seek to gain possession of rents on the spending side. According to Ross (2008), in

an economy excessively reliant on petroleum such as the one in Azerbaijan, the private

sector tends to shrink over time, while the only survival strategy for private companies

is to secure access to government contracts for building physical infrastructure and

providing services to the oil industry (some of the very few spillovers from the oil

sector). Provided that many of these companies are controlled by the state officials as

well and that the allocation and spending of public funds generally lack transparency, it

is possible to see here the corrupt practice of granting government procurement

contracts. In these conditions, awarding government contracts can serve as a political

instrument through which the regime can keep the business elites – especially those who

operate autonomously – dependent, loyal and politically marginal (Ross 2008).

Corruption, which in Azerbaijan takes place largely at the level of grand corruption and

murky commercial transactions, has been a source of “personal income” for the elites

and used by the president to stabilize the regime (Pleines 2012, 215).

While business magnates emerged in Russia in the 1990s as a result of rigged

privatization and then began to push forward their political ambitions, the phenomenon

                                                                                                               24 US Embassy Cable (27 January, 2010) Azerbaijan: Who owns what? Part 1 – the First Lady’s Family, by Donald Lu, available at http://wikileaks.ch/cablegate.html, accessed 7 December 2010.

 

   

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of state capture by ‘oligarchs’ (Treisman 2007), in Azerbaijan no serious privatization

ever occurred. Partial economic reform went no further than handing some state-owned

enterprises to regime cronies. The selective nature of economic reform, which benefited

the elite more than anyone else, and the prevalence of client-patron relations have

prevented the formation of a genuine capitalist market economy in Azerbaijan.

4.6. Threats to regime stability

4.6.1. Intra-elite threats Perhaps the most serious threat emerged during the presidential election in October

2003, when poor health of the ailing president engendered a potentially destabilizing

succession crisis. But the problem of succession was settled by keeping power in the

family. Ilham Aliyev, the son of the incumbent president, was nominated as a candidate

and was running for presidency together with his father until the latter pulled out of the

race in favor of his son (Mydans 2003). According to the assessment of the election

monitoring mission, the 2003 vote was rigged in favor of the junior Aliyev

(OSCE/ODIHR 2003). Heydar Aliyev died soon after the election.

While it is highly likely that the death of the ruler will lead to regime collapse in

personalist (neopatrimonial) autocracies like Azerbaijan, there are three factors which

seem critical for accounting for the success and outcome of regime change in

neopatrimonial regimes: strength of regime soft-liners, the autonomy of the military,

and strength of the opposition (Snyder 1998). Economic performance perhaps is also

important. All of these conditions were missing in Azerbaijan on the eve of the

succession in 2003. The opposition was organizationally weak and divided, as will be

discussed in the next sections. Economic performance was ‘good enough’ (10.5 percent

real GDP growth). Regime soft-liners were simply absent, and the security forces and

the army lacked institutional autonomy.

If the history of initial regime formation is any lesson, previously the real threat

to the leader came from armed rebels (e.g. OPON) or from rivals from within the

regime with some relatively independent financial resources (e.g. the former

parliamentary speaker). In the Azerbaijani case, the military and security forces have

been loyal to the regime. To use Snyder’s language, the regime’s patronage network so

thoroughly “penetrates” the state that state institutions lack any autonomy and the

 

   

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strategic elites are coopted through the extensive institutionalized patronage network

leaving no space for moderate opposition to emerge from within the elite. In other

words, Azerbaijan presents a situation in which the regime and the state apparatus are

merged into one hard-line actor. According to Snyder (1998, 51-52), regime hard-liners

are those who are “unconditionally committed to perpetuating the dictator’s rule”; soft-

liners are those actors within the regime who “perceive their survival to be separable

from the dictator’s… this often includes factions of the military and members of the

bureaucracy “alienated by the dictator’s interference with their autonomy and

professionalism”.

The military’s lack of institutional autonomy in Azerbaijan has “deeper”

historical and more proximal determinants. As mentioned earlier, the army was created

from scratch when the country emerged from the Soviet breakdown. Military personnel

lacked professional training. Around 1992, there were only 700 officers of Azerbaijani

nationality in the Soviet army on reserve (Fuller 1996, 127). An independent study

conducted around 2007-2008 described the armed forces as “fragmented, divided,

accountable-to-no-one-but-the-president, untransparent, corrupt and internally feuding”

(International Crisis Group 2008, 1). Alongside the army, there exist seven parallel

security structures which include “elements of the interior ministry and the state border

service and special units of the national security, justice, emergency situations and

defence industry ministries, as well as those of the special state protection service and

the national guard, directly under the president” (ICG 2008, 2-3). Safar Abiyev, the

minister of defense at that time, belonged to the ethnic Lezgin minority and was in

office since 1995 until he was dismissed in 2013. The longest serving defense minister

in the post-Soviet world, he was described as the “unsinkable general” due to his

“absolute and unswerving loyalty” to both presidents (Fuller and Giragosian 2010). In

sum, given unfavorable conditions regime change would have been difficult to achieve

in 2003.

After winning the 2003 presidential election, the junior Aliyev appeared to be

enjoying support of the elite loyalists, who backed the transfer of power in the critical

moment, but he was less secure than his father in his position as president (Economist

Intelligence Unit 2004). In 2005, in an effort to consolidate his power before the

parliamentary elections, the president sacked Farhad Aliyev, the minister of economic

 

   

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development, who is believed to be reform-oriented as suggested by his campaign

against monopolies that dominate the Azerbaijani economy. The president also sacked

Rafig Aliyev, the brother of Farhad, who was head of Azpetrol private oil company.

Other members of the elite who were dismissed include Ali Insanov, the minister of

health, an ambitious political figure who was one of the founding fathers of the ruling

YAP party. Finally, the minister of national security Namiq Abbasov who helped the

senior Aliyev in the critical formative years was sacked and sent to serve as an

ambassador abroad.

In the case of Farhad Aliyev, it seems that the ex-minister’s attempts to promote

private sector reforms met opposition from those members of the elite who have

benefited from the status quo regime and feared economic wealth redistribution. But it

may also be that by excluding some of the elite members, including some of the older,

less trustworthy members, the president wanted to redistribute some of the wealth in

favor of new actors he brought to the elite to counterbalance the strength of the old

guard. As Isa Gambar, chairman of Musavat Party said with regard to the changes

within the elite: “On the one hand, the regime is getting rid of its internal political

opponents, and on the other hand we see a process of redistribution of wealth and

property in favor of high-placed figures loyal to Ilham Aliyev” (Holley 2007).

Despite these “purges”, the young leader kept some of the key members of his

father's old guard including Ramiz Mehdiyev (the chief of the presidential

administration since 1995), Ramil Usubov (interior minister since 1994), Zakir Garalov

(prosecutor general since 2000), Kamaladdin Heydarov (chairman of state customs

committee, 1995-2006, and minister of emergencies since 2006), and the less influential

prime minister Artur Rasizade (who has served as prime minister on-and-off since 1996

to the present). This points to some degree of continuity in the elite composition. As

Svante Cornell noted in this regard: “much of the [Ilham Aliyev’s] cabinet is dominated

by an old guard of ministers left over from Heydar’s rule” (Reuters 2011).

Finally, in October 2008, Ilham Aliyev won a landslide 89 percent of the vote in

the presidential vote in which the other six candidates received somewhere between 1-3

percent of the vote. The Azadliq (Freedom) bloc of main opposition parties boycotted

the election, citing the absence of a fair, level playing field. Several months after his re-

election for the second term in 2008, the political leadership initiated a constitutional

 

   

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referendum to lift a two-term restriction on the presidency. The lift on term limits

allows Aliyev to run for the presidency indefinitely. Most likely by removing the term

restrictions the regime leadership wanted to prevent any potential challenge from arising

and running for presidential election in 2013. The move was also considered as the

leader’s attempt to enhance the incumbency advantages (Guliyev 2009b); that is,

bolstered by increased availability of patronage resources the leader acted to remove

previously adopted constraints on his incumbency advantages.

4.6.2. Societal opposition There seems to be general consensus that civil society in Azerbaijan is weak and

opposition parties not yet developed as strong political institutions. According to

Ottaway, there is “the almost complete absence of a mobilized civil society conscious of

its rights” and the opposition is weak (Ottaway 2003, 6). But whether the weakness of

civil society should be attributed to Soviet (or even pre-Soviet) legacies (Bertelsmann

Stiftung 2012) or to post-independence political structural conditions (Gahramanova

2009) remains a matter of debate. Perhaps both factors contributed to the weakness. But

it seems that, as Gahramanova demonstrates, while the period of glasnost created a

number of conditions favorable for the emergence of civil society organizations, the

(re)turn to (semi)authoritarianism since 1993 has prevented further development of civil

society due to increased government repression and more limitations with regard to

access to resources. In the early 2000s, there existed 1,400 registered NGOs in the

country. Between 150-400 of those NGOs were active (“effective actors on the national

or local scene”), and only 10-15 of them were considered to be “operating at a high

professional level” (Gahramanova 2009, 787; USAID 2005, 18).

The political opposition consists of some 40 small parties. It is organizationally

weak and hopelessly fragmented. Moreover, the number of parties reflects the number

of personalities “rather than forty distinct visions for Azerbaijan’s future” (Altstadt

1997, 147). These parties are organized around leaders rather than party platforms (ICG

2004). The main opposition parties with some degree of stability have been two splinter

parties: the Popular Front party (APF) and Musavat. They have been marginalized by

government repression (especially during the 2003 and 2005 elections) and the new

parliament convened after the 2010 election had no representatives of these two parties.

Considering the parliamentary election results, Azerbaijan’s party system can be

 

   

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characterized as a “dominant authoritarian party system” in which one-party dominance

is maintained by non-democratic means and “alternation in power is only a theoretical

possibility” (Bogaards 2004, 178).

The weakness of the opposition may be seen as an outcome of both opposition

party strategies and regime repression. While the opposition parties could mobilize

thousands of people for their protests in the past, they still were organizationally

unimpressive. Splits within the Popular Front definitely contributed to the

organization’s weakness. But most important, it was the suppression by the government

that produced a situation starting from 1995 that although opposition candidates were

allowed to compete, their presence in the legislature has been extremely marginal. The

parliamentary election results show a strong tendency toward fluidity of parties (their

impermanence) and very limited representation of political opposition in the parliament.

Elections are routinely rigged in the incumbent’s and the ruling Yeni Azerbaycan

Party’s (YAP) favor.

Much has been written about opposition parties and their potential role in

delivering democratic change in general (Bunce and Wolchik 2010) and Azerbaijan,

specifically (Valiyev 2006; Aliyeva 2006), but it seems that the political opposition was

weak already by the time of the first legislative elections in 1995, in which the APF

party and Musavat together received only 5 seats in the 125-member Milli Mejlis (the

Azerbaijani legislative assembly). Despite mass protests in the aftermath of the

parliamentary elections in 2005, the chances of oppositional success were dim because

of its organizational weakness. Zardusht Alizade, a political leader, commented in 2005:

“The main executor of revolutionary processes in Azerbaijan, the national-democratic

opposition, is weak right now. It is divided and too poorly organized to stage a revolt”

(Associated Press 2005).

The November 2010 parliamentary election results confirmed the dominant

position of the pro-regime Yeni Azerbaijan Party. According to the poll results, YAP

won 71 seats, the so-called independents (most of them loyalists) - 41, and “official”

opposition parties (APF party and Musavat) gained no seats in the current legislature.

 

   

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4.7. Continuity and coherence

Finally, elite interactions in Azerbaijan can be described by highlighting two

characteristic patterns: continuity and relative coherence. One indicator of elite

continuity is the fact that, after re-election in 2008, Aliyev reappointed his entire cabinet

with the exception of the minister of economic development (ICG 2010a, 4). As one

analyst observed, “[t]he continuity of leadership has been reflected in an extraordinary

continuity of ministers, with the great majority of ministers and heads of major state

institutions serving for a decade or more in either the same posts or other posts at the

same level” (Reed 2010, 11).

With regard to the relative coherence of the elite evidence is mixed, showing

that there are signs of both conflict and coherence. One area of potential conflict is

between members of the powerful ‘clans’ and the president. When he succeeded his

father in office in 2003, Ilham Aliyev was considered to be a weak leader who would be

controlled by more experienced politicians from his father’s old guard. The Polity IV

project (2008) noted in this regard, “[i]t remains unclear whether Ilham will run the

clan, as his father did, or the clan will run him” (Polity IV 2008).

There is also evidence suggesting that there is tension within the ruling elite (e.g.

Mirkadirov, 2004; Agayev, 2007), and that elite factions compete for more power and

influence. As power in the Azerbaijani context also implies access to enormous wealth,

generated by the influx of oil revenues, the elite conflict might be “fueled by the rivalry

over the division of oil money” (Leila Alieva, quoted in Falkowski, 2009). The rivalry

between the Yerazi and Nakhchivani factions has been noted by many analysts (e.g.

Mirkadirov, 2004; Peuch 2004). The president is seen as being interested in pitting one

elite group against another and serving as the final arbiter. This divide-and-rule strategy

enables him to prevent any of the rivaling factions strengthening or allying with another

fraction and posing a threat to his rule.

Immediately before the parliamentary elections in 2005 Ilham Aliyev ordered

the arrest of Farhad Aliyev (minister of economic development), Ali Insanov (minister

of health), Fikret Yusifov (finance minister) and several high-ranking officials for their

alleged collaboration with the former parliamentary speaker, now exiled, Rasul Guliyev

in plotting a coup d’état. Both Farhad Aliyev and Ali Insanov were considered to be

powerful oligarchs, while the latter was also the founding leader of the ‘Yerazi group’.

 

   

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Then, during 2006, President Aliyev appointed two former businessmen Fizuli

Alakbarov and Azad Rahimov, as respectively the minister of labour and social

protection, and the minister of youth and sports. Some saw the decision to arrest the

ministers and the subsequent personnel changes as an effort by the president to get rid

of ambitious aspirants to presidential power and to replace them with more loyal, Baku-

raised, business-oriented oligarchs (ICG 2010a, 3). Others saw these decisions as

reflecting the ‘decentralization of power’ under Ilham Aliyev’s presidency, towards

greater influence of oligarchs and the head of the presidential administration

(Gahramanova 2009, 786).

On balance, however, the governing elite demonstrated more coherence than

conflict, especially in times of crises that could potentially imperil the rule of the entire

elite. We can see this ‘solidarity’ during the succession period, before and during the

presidential poll of 2003. Even though the rival challengers from within the elite could

have used the opportunity to seize power, they decided to support the transfer of power

to Heydar Aliyev’s son. Cheterian (2010, 104) notes that “[t]his transfer of power

within the Aliyev family […] reflected the agreement of key branches of the ruling cast.

It also reflected a certain cohesion within the ruling elite”. Hale (2006, 310) explains

that as the son of the outgoing president, Ilham Aliyev was “better positioned to assure

other, rival elite groups that he would maintain his father’s coalition”. Competing

factions within the ruling elite were able to reconcile their differences whenever they

faced a challenge to their leader’s (and therefore their own) hold on power, such as for

instance, during the contested parliamentary election in 2005. Rasizade (2004, 139)

suggests that, “[a] substantial number of people depend on patronage from the Aliyevs

for their privileged position and have a vested interest in retaining the regime in order to

preserve their illegally privatized property, illicit incomes and the wealth”. In a similar

vein, a US Embassy cable25 observes that “the President and his cohorts, who largely

were carried over from his father’s administration, now seek predictability, stability and

continuity to preserve and protect public and private fortunes”.

                                                                                                               25 US Embassy cable (18 September 2009) President Ilham Aliyev – Michael (Corleone) on the outside, Sonny on the Inside, by Donald Lu, available at http://wikileaks.ch/cablegate.html, accessed 7 December 2010.

 

   

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4.8. Conclusion

The main findings of this case study can be summarized as follows. First, the

Azerbaijani elite is organized as a network of patron-client relationships in which the

president uses patronage and other resources to ensure loyalty and support of members

of his ruling coalition. Data on public sector employment suggest that patronage

possibilities have been plentiful and the elites have been interested in keeping patronage

resources sufficiently supplied. Second, members of the president’s family and family

connections play crucial roles in Azerbaijan’s elite structure. Third, politics and

economics are fused in Azerbaijan in such a way that politicians from the ‘family’

group, as well as influential state officials, control significant segments of the country’s

economy. Fourth, the powerful elite groups whose fortunes depend heavily on their

connections with the current leadership have developed a vested interest in the

continuation of the regime and it therefore looks highly unlikely that these groups will

defect and turn against it. Finally, Azerbaijan’s elite displays patterns of continuity and

coherence. Elite coherence fostered by enormous patronage opportunities financed by

the ongoing oil boom can explain the relative stability of the Aliyev regime.

Starting from 1994, Azerbaijan received substantial amounts of FDIs and

bonuses. Between 1995 and 2000, the government received $673 million in oil bonuses

from foreign oil companies (calculated from IMF Republic of Azerbaijan Article IV

Consultation, various years.). The bonuses played a significant role in maintaining fiscal

balance before the oil boom. They were primarily used to finance budget deficits and,

between 1995 and 2000, oil bonuses covered on average 62 percent of budget deficits

(Bagirov et al. 2003, 100). In the period between 1995 and 2001, net FDI inflows in the

Azerbaijani economy were $3.7 billion (World Bank 2003). Most of FDIs went to the

state-controlled oil and gas sector and, according to Bayulgen, these inflows

“significantly empowered the political fortunes of authoritarian leaders by giving them a

symbolic vote of confidence from outside and stimulating economic growth” (Bayulgen

2005, 63).

Oil prices began to rise in 1999 and reached $64 per barrel in 2006. Azerbaijan

took advantage of high prices to the fullest. GDP growth was impressive between 2003

and 2008 reaching the world record high of 34.5 percent in 2006. What is clear,

however, is that high growth performance was driven largely by more than 60 percent

 

   

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growth of oil GDP. Thanks to oil revenues, the state budget grew tenfold, from $1.2

billion in 2003 to more than $11 billion in 2010 (budget.az). GDP per capita increased

from below $2,000 levels in mid-1990s to more than $9,000 in 2010 (see Table 4.4).

Poverty rate was reduced significantly from nearly 50 percent in 2001 to 15.8 percent in

2008 (World Bank online).

Table 4.4. GDP per capita in Azerbaijan, Armenia and Georgia

GDP per capita at Purchasing Power Parity (PPP)

(current international $)

Source: World Bank database

http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD

Table 4.5. Public finances in Azerbaijan

2004 2005 2006 2007 2008 2009 2010

(prelim.) (proj.)

Total Revenue 2.288 3.132 5.248 8.007 19.426 14.368 20.073

Oil Revenue 864 1.221 2.667 4.305 14.600 9.461 14.552

Non-Oil Revenue 1.425 1.922 2.585 3.701 4.826 4.907 5.521

Total Expenditure 2.207 2.839 5.134 7.356 11.829 12.027 12.466

Total Expenditure

(in percent of GDP) 26 23 27 26 31 35 30 Note: in million of Azerbaijani manat unless noted otherwise Source: IMF, Republic of Azerbaijan Article IV Consultation, various years

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Azerbaijan $3,433 3,471 2,702 2,091 1,690 1,508 1,539 1,644 1,815 1,960 2,207 2,461

Armenia $2,122 1,955 1,183 1,128 1,243 1,388 1,520 1,619 1,775 1,872 2,035 2,287

Georgia $4,433 3,591 2,005 1,437 1,328 1,431 1,662 1,906 2,011 2,115 2,218 2,394

2002 2003 2004 2005 2006 2007 2008 2009 2010

2,746 3,096 3,478 4,496 6,176 7,86 8,714 9,499 9,943

2,635 3,070 3,485 4,096 4,782 5,591 6,098 5,320 5,463

2,584 2,951 3,220 3,611 4,044 4,687 4,905 4,776 5,073

 

   

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With the start of the oil boom in 2003, as fiscal revenues increased, the government

embarked upon large expenditure. Since 2006 it tripled the level of spending to finance

public investment projects in social welfare sector, public sector salaries and

infrastructure projects (World Bank 2009). As Table 4.5 shows in 2009 government

revenue increased from 2 billion manats in 2004 to more than 19 billion manats. Oil

revenues accounted for the large part of this increase. From 2006 to 2008, total

expenditure almost doubled (from 5 billion manats to above 10 billion).

Although Azerbaijan is an old oil producer, it had little experience in managing

its oil wealth until 1991. During Soviet times, the oil revenue management was run by

Soviet central planners (Bagirov et al. 2003, 90). An important step in government’s

revenue management was the creation by a presidential decree of an oil fund in 1999 to

perform savings and stabilization functions. Since 2000, the State Oil Fund (SOFAZ)

has become an important fiscal policy instrument. Its assets have been used to finance

housing for refugees, infrastructural projects, student education abroad and the

government’s share in the BTC pipeline. Today SOFAZ’s funds exceed $30 billion, as

of October 2011 (SOFAZ). Based on the World Bank’s estimates, this may reach $100

billion in the next ten years (News.az 2011).

Expenditures from SOFAZ consist mainly of transfers to the budget (78 percent

of the total). As Table 4.6 shows, as of 2011 more than $32 billion were transferred

from the fund assets to the state budget. Transfers from SOFAZ to state budget

increased substantially since 2007 from 32 percent of budget revenue in 2008 to 60

percent in 2012 (Revenue Watch n.d.). This implies an increasing reliance of the budget

on transfers from SOFAZ which may have a negative influence on taxation (Aslanli

2012).

Table 4.6. State Oil Fund (SOFAZ) assets and transfers to the state budget Year Assets Transfers to budget

2000 270 …

2001 492 …

2002 692 …

2003 817 127

2004 964 165

 

   

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2005 1.394 191

2006 1.455 745

2007 2.475 745

2008 11.219 4.838

2009 14.900 6.257

2010 22.767 7.530

2011 25.797 11.716

Total transfers: 32.314

Note: in millions of U.S. dollars; data on budget transfers converted to current (2012) U.S. dollars; 2011 figure projected. Source: SOFAZ Annual Report 2010, http://www.oilfund.az/pub/uploads/annual_2010en.pdf budget.az, http://www.budget.az/budget/main?content=526

SOFAZ was established both as a savings fund and a sterilization mechanism

against the Dutch disease. It is held to be clean and transparent, and was certified as

compliant by the EITI, the Extractive Industries Transparency Initiative

(http://eiti.org/Azerbaijan). It accumulates all revenues associated with post-Soviet

energy production abroad. SOFAZ also operates as a deficit financing source (World

Bank 2005, 16). It invests its funds in high quality securities abroad. SOFAZ

management consists of the President (of the Republic), SOFAZ’s Executive Director

(appointed by the president), and the Supervisory Board (also appointed by the

president). The Statute of SOFAZ, establishes the accountability of the fund directly to

the president. Only president “assigns” rights and responsibilities (article 1.6). The

assets of the fund are “utilized in accordance with the main directions … approved by

the President” (article 4.1). Moreover, any changes to the Statute should be approved by

the President (article 7) who has the sole power to liquidate the fund (article 8) (SOFAZ

Statue 2000).

In sum, as the analysis has shown, FDIs, bonuses and later oil fiscal revenues

played an important part in maintaining macroeconomic stability. For the regime that

relies on patronage, oil rents provided patronage resources (state sector jobs etc.) to

keep the elites loyal. Increased spending on coercive structures helped keep the

opposition weak. Oil revenues allowed the president to increase public spending and to

expand the patronage network which limited the political space for opposition.

 

   

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Chapter 5. Oil, Personalism and Regime dynamics in Cameroon

5.1. Background

5.1.2. Introduction This Chapter examines the link between oil and democratization in Cameroon. A case

study of Cameroon shows that oil revenues helped sustain the Biya regime. Given the

personalist nature of the regime and thus the importance of patronage for its survival, oil

revenues were channeled to finance increases in public spending and expansion of the

public sector. The regime’s extreme personalism allowed the president to exercises

discretionary control of the revenues, which in the 1980s were kept in secret bank

accounts abroad, as well as their spending. When oil revenues declined and pro-

democracy protests erupted, the government adopted elections and other trappings of

democracy. Aid conditionality also played a role in the regime’s decision to allow for

multi-party elections. Yet, financial aid contributed by France and international

financial institutions (IFIs) helped Biya’s government withstand the critical 1991-92

years. Inconsistency in democracy promotion by western governments, aid

conditionality by IFIs and France’s economic and political support for the regime

reduced the effectiveness of Western leverage (Levitsky and Way 2010). When the

economy returned to normal and government revenues increased in the late 1990s and

especially since 2002 (due to high oil prices), the window of opportunity for democratic

change had been already missed and hegemonic authoritarianism set in as a new

equilibrium situation.

5.1.3. Regimes in oil-rich African states Most political regimes in sub-Saharan Africa (SSA) today are electoral autocracies and

hybrid regimes (Van de Walle, 2002; Bratton 2013). As of 2012, 20 of the 51 Sub-

Saharan Africa were rated as “not free”, 20 as “party free”, and 11 as “free” by Freedom

House (2013). A large subset of these regimes is electoral autocracies in which

essentially authoritarian rule coexists with electoral competition (Schedler 2006a).

Unlike closed autocracies that ban political opposition parties and proscribe electoral

competition for the executive office and legislature, electoral autocracies – hegemonic

and competitive authoritarian regimes – hold multi-party elections. The difference

 

   

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between the latter two is in the degree of certainty of election outcomes: in hegemonic

regimes, the outcome of elections is always predictably skewed in favor of the

incumbent candidate or ruling party. In competitive authoritarian regimes, contestation

is more meaningful with the possibility that the incumbent will be defeated (Roessler

and Howard 2009).

Much of the scholarly literature on these new types of authoritarianism has

focused on domestic players (incumbents and oppositions) and their strength and

strategies in the domestic electoral arena (Schedler 2002; contributions in Schedler

2006b; Howard and Roessler 2006; Bunce and Wolchik 2010). Levitsky and Way

(2010) emphasized external influences, Western linkage and leverage, in combination

with electoral strength of the incumbent regime/ruling party in determining the

trajectories of competitive autocracies.

A parallel literature on the politics of natural resources (Ross 2001, 2012; Jensen

and Wantchekon 2004) has argued that certain types of natural resources, notably

petroleum wealth (oil and natural gas), impede democratic processes in oil-rich

authoritarian regimes by empowering the incumbents through increased patronage

spending and repression and other mechanisms. In countries with high oil revenues,

“stubborn” authoritarianism is the rule and authoritarian breakdowns are a rare

phenomenon (Smith 2006). In short, the recent “political resource curse” theory

suggests that under certain conditions oil rents increase the likelihood of authoritarian

survival.

Table 5.1. Oil production in the Gulf of Guinea states

(in thousand barrels per day) Country

Production levels Start date

Year 1980 volume/peak year Year 2012

Angola 150 2014.3 (2008) 1,872 1955

Cameroon 58 185 (1985) 63.5 1977

Chad 0 176.7 (2005) 104.5 2003

Congo, Republic of 65 311.9 (2010) 291.9 1957

Equatorial Guinea 0 368.5 (2007) 318 1991

Gabon 176 370.3 (1997) 242 1956

Nigeria 2,060 2630.9 (2005) 2,524.10 1958

Source: U.S. Energy Information Administration;

http://www.mbendi.com/indy/oilg/ogus/af/ga/p0005.htm#OtherCountries

 

   

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Sub-Saharan African evidence lends support for the political oil curse thesis.

The region is home to seven major oil-exporting states geographically concentrated in

the Gulf of Guinea: Angola, Cameroon, the Republic of Congo (Brazzaville), Gabon

and Nigeria are old oil producers; in Equatorial Guinea and Chad production of oil

began in 1991 and 2003 respectively (see Table 5.1). Oil is expected to generate $350

billion in revenue for these seven countries over the period of 2002-2019 (Mañe 2004).

Cross-national statistical evidence suggests that African oil exporters are less likely to

democratize than their oil-poor counterparts in the world (Ross 2012) and their own

region (Jensen and Wantchekon 2004). All seven oil producing countries are not

democracies: Nigeria and Chad have competitive authoritarian regimes; Cameroon, the

Republic of Congo, Equatorial Guinea, and Gabon have hegemonic regimes, and

Angola is classified as closed regime (see Table 5.2).

Table 5.2. Political regimes in the oil-rich Gulf of Guinea states Country Regime type

pre-Cold

war window of opportunity -1990s current (at 2006)

Angola

Closed

(-->1991) Collapsed (1992-96), Closed (1997-->) Closed

Cameroon

Closed

(-->1991) Competitive (1992-96), Hegemonic (1997-->) Hegemonic

Chad

Closed

(-->1991) Competitive (1996-->) Competitive

Congo,

Republic of

Closed

(-->1991)

Competitive (1992-96), Collapsed (1997), Closed

(1998-2001)

Hegemonic

(2002--)

Equatorial

Guinea

Closed

(-->1995) Hegemonic (1996-->) Hegemonic

Gabon

Closed

(-->1992) Competitive (1993-2004)

Hegemonic

(2005--)

Nigeria

Closed

(-->1998) Closed (-->1998)

Competitive

(1999-->)

Note: The coding of political regimes, covering the 1987-2006 period, is by Roessler and Howard (2009).

Source: Roessler and Howard 2009.

 

   

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There are also differences in the structure of these regimes in terms of the type

of formal and informal institutional configuration of power. Applying Geddes’ typology

yields 4 (out of 11) regimes based on personal rule (Cameroon under Biya, Equatorial

Guinea under Obiang, Congo under Sassou Nguesso, and Chad under Deby) and its

combination with either military (as in Nigeria during Abacha’s rule) or single party (as

in Congo up to the early 1990s as well as Gabon until today), two cases of single party

rule (Angola - thus its designation as closed regime noted above; Cameroon under

Ahidjo), and two military regime spells in Nigeria before Abacha (see Table 5.3). Thus,

most of Africa’s oil rich regimes (7 of 11) are characterized by either pure personal rule

or display strong personalist tendencies. A typical African oil-rich state today is an

electoral autocracy with strong personalism. Notice also that democratic elections that

were held only in two countries (Congo in 1992 and Nigeria in 1979) produced short-

lived governments that were quickly replaced by new authoritarian regimes. In sum,

democratic experiments in oil-rich states in sub-Saharan Africa were not sustainable and

most changes occurred within the authoritarian regimes affecting either the

competitiveness dimension or governance structure.

Table 5.3. Geddes regime coding of the oil-rich Gulf of Guinea states Angola: (1976–1990) – single–party, People’s Movement for the Liberation of Angola

(MPLA); (1992–1996) – interregnum or anarchy; (1997–->) – single–party, MPLA.

Cameroon: (1961–1982) – single-party, Cameroon National Union (CNU, later renamed

Cameroon People’s Democratic Movement, CPDM); (1982–->) – personal, Biya.

Chad: (1990-->) -- personal, Deby.

Congo, Republic of: (1968–1992) – single-party/military, Congolese Workers Party (PCT);

(1992–1996) – electoral democracy; (1997–->) – personal, Sassou Nguesso (also president,

1979–1992).

Equatorial Guinea: (1979–->) – personal, Obiang.

Gabon: (1960–->) – single-party/personal, Gabonese Democratic Party (PDG), Bongo family.

Nigeria: (1966–1979) – military; (1979–1983) – electoral democracy; (1983–1993) – military;

(1993–1999) – military/personal, Abacha/Abubakr.

Sources: Geddes 1999; Brownlee 2009

 

   

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In other words, most oil-rich regimes exhibit remarkable durability (Cameroon,

Chad, Gabon, Equatorial Guinea), whereas in cases where regimes transformed due to

civil war (Angola), military coup (Cameroon, Nigeria) or democratic elections

(Nigeria), they were quickly replaced by another authoritarian government. For

example, in Cameroon during the early 1980s oil boom, Ahmadou Ahidjo peacefully

stepped down to give power to his designated successor Paul Biya. But 2 years later

Ahidjo’s supporters in the military staged a violent coup prompting a change in the

regime towards greater concentration and personalization of power. In sum, even after

adopting electoral rules of the game, Africa’s oil-rich states remained in essence

authoritarian and resisted democratic change.

5.1.4. The oil-personal rule link As discussed in previous chapters, personalist rulers govern by providing patronage to

their supporters, therefore more oil revenues imply greater patronage opportunities.

Personalist regimes are particularly vulnerable to any dramatic exogenous economic

shocks that could disrupt “the material underpinnings of regime loyalty” (Geddes 1999,

122). Chehabi and Linz (1998, 27) suggest that there can be a link between oil and

neopatrimonial (sultanistic) governance.

In African oil states, party-based regimes are rare and where a single party

dominates, regime consolidation preceded oil (as in Angola). In those countries that

started out as personalist regimes, personalism persists after the oil’s onset. In some oil-

rich regimes constraining institutions (a single party or the military) weakened over

time and regimes became more personalized as in Cameroon under Paul Biya in the

early 1980s during the oil boom, in the Republic of Congo under Sassou Nguesso’s

return to power 1997 and possibly Angola, Africa’s only pure party-based regime (see,

e.g. Hodges 2004; de Morais 2011). All these examples suggest that in some cases the

oil windfalls tend to promote the “personalization” of previously institutionalized forms

of authoritarian rule.

5.2. Cameroon case study

5.2.1. Introduction How exactly does oil influence regime change/stability in African states? To answer

this question, I explore the oil-regime link in Cameroon, a case that fits the typical

 

   

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African oil-rich regime and is often seen as paradigmatic case of the “resource curse”.

My primary method is within-case study analysis with the use of process-tracing

techniques.

Cameroon is comparatively modest oil producer (around 180,000 barrels per day

in the peak year of 1985), but oil is one of Cameroon’s major exports and accounts for a

significant part of government revenue (Cossé 2006). Moreover, Cameroon is

considered as an example of perverse effects of oil abundance and often cited as a

textbook case of the resource curse (Acemoglu and Robinson 2013). Traditionally a

cash crop exporter, Cameroon started oil exports in the late 1970s by which time the

country’s first president Ahidjo had consolidated his regime. Ahidjo’s rule was based

on four pillars: coercion, patronage, a single party, and French support. Ahidjo’s

patronage network included elite representatives of all major ethnic groups. A

moderately strong political party was created to support the regime. Good prices for

coffee and cacao stimulated moderate economic growth and political stability. Oil

discoveries in the late 1970s transformed the economy. Beginning from 1978 oil

provided for a substantial share of government fiscal revenues. When the country was

entering the oil boom stage, Ahidjo resigned from his position, took over the

chairmanship of the ruling Cameroon National Union (CNU) party, and peacefully

transferred power to his successor Biya, possibly (mis)calculating that he would make

the CNU the center of power and policy-making. In 1983-84, the rivalry between the

two leaders led to the mutiny by pro-Ahidjo officers in the military crashed by force.

After the coup, Biya reshuffled the government and party elites placing loyalists to key

policy positions in the government and the ruling party. The place of the party in the

decision-making diminished and greater emphasis was put on loyalties personally to

Biya. Under Biya power was more centralized and corruption proliferated more

extensively. The public sector expanded enormously. All this was achieved with the

help of the oil windfalls. In the mid-1980s, commodity prices went down and the

Cameroonian economy entered the period of economic downturn.

In the early 1990s, a confluence of external pressures, strong domestic

opposition and lingering economic crisis forced the government of Biya to introduce

multiparty elections. In the 1992 parliamentary election, boycotted by the main

opposition Social Democratic Front (SDF) party but widely regarded as relatively

 

   

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competitive, opposition parties gained nearly a half of parliamentary seats and the ruling

Cameroon People’s Democratic Movement (CPDM) party had to form a coalition with

a small party to acquire a slim majority. In the presidential vote held in the autumn of

1992, there was a standoff between the incumbent and the main opposition challenger

John Fru Ndi (SDF). Biya won narrowly. However, by the mid-1990s Biya and the

ruling party managed to regain hegemony and majority representation in the parliament.

Why and how the Biya regime survived? Levitsky and Way (2010) argue that

even though the Biya regime was patronage-based and therefore highly vulnerable to

fiscal crisis, it withstood economic downturn well. Western leverage, a crucial driver for

democratization, was limited. France played the role of the “dark knight” and supported

Biya and the status quo. French aid, they note (262-3), “allowed [the Biya government]

to pay soldiers and civil servants throughout the 1991 crisis” and saved the regime from

collapse. However, this was not the only source of Biya regime’s survivability. Oil

revenue was crucial by helping Biya cement his elite coalition and concentrate powers

after he assumed the office in 1982. Western leverage was stronger through the late

1980s and early 1990s when Cameroon was plunged into economic crisis. During this

period, conceding to the democratizing pressures from Western governments and

international financial institutions (IFIs), Biya partly released the safety valves:

opposition parties were legalized and pluralist elections were allowed. As the

government’s economic situation improved by the mid-1990s due to French and IFIs’

financial support and the rising oil prices (especially after 2003), the effectiveness of

Western leverage weakened. This reduced the costs of maintaining autocratic rule and

the regime successfully re-equilibrated.

Apart from external factors, however, domestic political regime structure was

even more important. Following Soares de Oliveira (2006, 2007) and Basedau (2005), I

argue that both ex-ante (pre-oil) and ex-post context was crucial. Before the arrival of

oil, the regime’s high levels of personalism/ patrimonialism were a strong impediment

to democratization. Oil added to this by aggravating the pre-existing “pathologies”

associated with neopatrimonialism. As note above, there is an “elective affinity”

between personal rule and resource dependence: oil rents and personal rule are highly

compatible and mutually reinforcing. Oil feeds the patronage network built around the

president and personalist regimes’ elites benefit from rent-seeking opportunities that oil

 

   

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presents them with. That is why, perhaps, it should not be surprising that many mineral-

exporting states in Africa and elsewhere preserve resource-based economies for decades

failing to diversify away from primary resource exports (Dunning 2005). Oil feeds

personalism, and personalism in turn promotes oil resource dependence. Personalism in

conjunction with oil is path-dependent.

Comparative studies show that personalist autocracies are associated with a set

of perverse economic outcomes, such as poor economic growth, high levels of

corruption, and poor governance. Most important, compared with more corporate and

bureaucratized forms of authoritarianism, personalist regimes have been found to be

especially resistant to democratic change and are more likely, than other forms of

authoritarianism, to be replaced by other types of nondemocratic rule when regime

change occurs. In fact, as the large-N analysis in Chapter 3 demonstrates, personalist oil

autocracies worldwide never transitioned to democracy over the period of 1950-2010

(author’s own calculations). In the Cameroonian case, even during fiscal crisis,

mitigated with French and IFIs financial support, limited resources were used to benefit

the state-fed patronage network tied to the public sector and security forces. Fiscal crisis

affected the living standards of the ordinary people and to a much lesser extent the

fortunes of the state elites. Concessions were made – multi-party contestation allowed –

but the regime leadership moved quickly to regain control benefitting from a surge in

world oil prices beginning from the 2000s.

5.2.2. Pre-oil context: Authoritarian state-building under Ahidjo On independence, Cameroon shared many of the typical features of post-colonial sub-

Saharan Africa: ethnic heterogeneity of the population, the lack of democratic

experience in the past, challenges of nation- and state-construction, a distorted economy

oriented towards exports of primary commodities, economic dependence on the former

colonial power and other characteristics. Present day’s Cameroon was formed as a new

state after the declaration of independence by the former French-administered territory

of Cameroon and its subsequent merger with the southern part of former British

Cameroon in 1961. Cameroon is home to more than 250 ethno-cultural groups. Its

population is divided into three religious confessions (Muslims in the north, Christians

and animists in the central and south regions), and linguistically between the

 

   

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Anglophone minority concentrated in the western regions and the Francophone majority

in the rest of the country.

Ahmadou Ahidjo, who first served as prime minister between 1958-60, was the

first president of independent Cameroon. Ahidjo was a French speaker from the Fulani

ethnic minority group from the predominantly Muslim north. His 20 years autocratic

rule was a period of relative political and economic stability. Ahidjo’s leadership was

based on the dominant position of the ruling party, tight control of the state’s military

and security forces and his ability to maintain a balance and support of a multi-ethnic

elite coalition.

As in other African authoritarian regimes of the cold-war era, Ahidjo’s rule was

supported by the single official party. The ruling Cameroon National Union (CNU)

party was established in 1966, the same year that all other existing parties were

outlawed. Ahidjo was the head of CNU during his presidency and for a short time after

resigning from presidency in 1982. Single-party rule that was common in most African

states during the Cold War was justified by political leaders like Nyerere of Tanzania,

Nkrumah of Ghana and Ahidjo of Cameroon as necessary to restrain centrifugal

tendencies and to avoid politicization of ethnicity that could result from multypartyism

in multi-ethnic societies (Mbaku and Takougang 2004, 3). In practice, however, these

autocratic restrictions and party hegemony were part of the familiar “politics of the

belly” (Bayart 1993) whereby rulers turn the state apparatus into “an instrument of

plunder”, “a corrupt, patrimonial system in which resource allocation became highly

politicized” (Mbaku and Takougang 2004, 6).

The unusually high level of ethno-linguistic-regional heterogeneity made ethno-

regional and linguistic cleavage a salient factor in Cameroonian politics. Although such

cleavages might have contributed to the onset of civil war in other African states, they

have so far not endangered stability in Cameroon –partly because of Ahidjo’s efforts to

reduce the saliency of ethnicity (Fearon and Laitin 2005). By building a delicate multi-

ethnic alliance and giving each major ethnic group a stake in the system, Ahidjo

managed to avoid inter-ethnic conflict. This policy was continued by his successor

President Biya.

In the first formative years, the main challenge to Ahidjo’s leadership came from

the Union des Populations du Cameroun (UPC), the anti-colonial movement that was

 

   

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banned by French authorities in the 1950s. The UPC was launched as pro-independence

movement in 1948 in the western regions and was ruthlessly suppressed by the French.

Thousands of locals (mainly Bamileke people) were massacred. The UPC continued

military struggle after independence pushing for complete independence from French

rule and against French economic and commercial interests in the country (Takougang

2004a, 67). Trying to keep its military strategic presence and to preserve its commercial

interests in the former colonies, France supported moderate groups, like the Parti des

Democrates Camerounais (PDC) and the Union Camerounaise (UC), and opposed

radical groups like the UPC. The French government supported Ahidjo for he was

widely considered to be pro-France. By the early 1970s the UPC forces were defeated

marking the end of the “implicit civil war”. Thus, supported by France, Ahidjo was able

to consolidate his rule by 1972 and is widely thought to have acted as a protégé of

France thereafter. One effect of the civil war was that it helped create a strong military

loyal to Ahidjo (Fearon and Laitin 2005, 10).

Under Ahidjo, Cameroon had a highly centralized form of government modeled

after de Gaulle’s Fifth Republic (LeVine 1986, 22). The 1972 constitution replaced

federalism with unitary administration and divided the territory into 8 Francophone and

2 Anglophone provinces (the Northwest and Southwest) (Dicklitch 2002). The new

constitution centralized power in the capital Yaounde and concentrated decision-making

in the presidency and more precisely in the hands of president Ahidjo. Under his rule,

centralization and concentration of power “was so thorough and complete that his

ministers could not even initiate any policy without the president’s approval” (Mbaku

2002, 136). Anglophone politicians and their political group (Southern Cameroons

National Council (SCNC)) saw these policies to centralize power as further steps

toward economic and political marginalization of the Anglophones.

Ahidjo’s autocratic rule was based on a mixture of repression (with the help of

repressive police institutions, notably the Brigades Mixtes Mobile (BMM) and Service

de documentation (SEDOC) and patronage. Most important, Ahidjo managed to

maintain a balanced multi-ethnic coalition network (LeVine 1986, 23). Since the state

played a major role in the economic model of planned liberalism, Ahidjo’s official

economic doctrine, state resources were available for cementing the “ethno-religious

client network” (Mbaku 2002). State patronage was used for bribing and neutralizing

 

   

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competing leaders and coopting influential regional ethno-regional elites (LeVine cited

in Mbaku 2002, 136). Thus, President Ahidjo:

“cultivated a highly paid and privileged ethno-regional client network that enhanced his ability to monopolize political power in the country. This was a sophisticated patronage system with Ahidjo as its head or grand baron. Below him were several ethnic barons, which were serving as spokesmen for their respective ethnic groups. Each baron secured the support of his constituency for Ahidjo, and in exchange, was rewarded handsomely - such rewards usually included public projects for the respective constituency and a chance for the baron to engage in personal enrichment” (Mbaku 2002).

Kofele-Kale (1986, 77) makes a similar observation noting that “the ethnic arithmetic

formula for distributing political power was in reality a sophisticated patronage system

through which ethnic groups were transformed into pressure groups.” Ahidjo’s

patronage system, according to Kofele-Kale (1986), “included, in varying combinations,

leaders of critical southern and western ethnic groups, his own northern allies,

businessmen, traditional chiefs and magnates, and members of the country’s

intelligentsia” (cited in Mbaku 2002). The Ahidho’s system included representatives of

almost all major ethnic groups (Takougang 2004a, 75). LeVine (1986, 35) notes the

“relative elite stability” at the government level in the 1970s after constitutional changes

transformed Cameroon into a unitary republic.

5.2.3. Biya’s rule (up to the early 1990s) In an unusually peaceful transfer of power in 1982, Ahidjo announced his resignation

and allowed his handpicked successor former Prime Minister Paul Biya to take over the

presidency. After leaving the office, Ahidjo kept the position of the party chairman of

CNU for himself. Later it became apparent that by controlling the party, he intended to

rule from behind the scenes. As the party chairman he tried “to assert the primacy of the

CNU over the government” (Mbaku 2002, 137). Biya refused to accept the supremacy

of his former chief. In 1983, Ahidjo blocked a number of policies proposed by Biya and

went on to publicly assert the primacy of the party over the government. Feeling

increasingly threatened by Ahidjo’s ambitions to dominate Biya first reacted by sacking

six of Ahidjo’s fideles from the government in 1983 and taking over the chairmanship

 

   

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of the ruling party (Ahidjo fled the country) (LeVine 1986, 36). In 1984, a group of pro-

Ahidjo officers staged a military coup against Biya. The attempted coup was defeated

with the help of a group of pro-Biya officers in the presidential guard. Biya accused the

exiled former president Ahidjo of plotting the coup.

Captain Guerandi Mbara, one of the coup organizers, explained the rationale for

the coup citing the “legitimacy crisis”, the failing state, corruption and plundering of

public resources and noted the continuity of the system: “Some argue that [at the time of

the coup] Paul Biya had not yet found his bearing. Granted. But do they realize that

Paul Biya is the continuation of the system? He has [been] an important player within

the system since 1962. When he became president he was well versed in the arcane

mysteries of power” (Tande 2009).

The coup was a turning point in Biya’s presidency. As a measure against

possible conspiracies in the future, he purged the ministries from Ahidjo’s supporters.

As a result, the high-rank government members were “almost completely replaced”

(LeVine 1986, 24). Then, in 1985, he called for a session of the ruling party in which its

name was changed to Cameroon People’s Democratic Movement (CPDM). Le Vine

(1986) argues that even though after the coup Biya replaced the top echelons of elites

with his own loyalists from the South, he followed Ahidjo’s policy of preserving ethnic

balance. Moreover, Takougang (2004b, 104) notes that Biya was slow in replacing

Ahidjo’s officers and even reappointed some of Ahidjo’s close associates whom he

dismissed earlier. Some argue that since the coup was backed by Ahidjo’s northern

elites, Biya decided to weaken the power of the northern regions. For example, by one

of his decrees the previously single territorial unit of Northern region was divided into

three provinces: Adamawa, North, and Far/Extreme North (Dicklitch 2002).

Biya also purged the officers’ corps from Ahidjo’s loyalists and replaced them

with the officers loyal to him. He also granted them promotions and privileges and

during the crisis he made sure the high-ranking military and security officers were not

affected by pay cuts (ICG 2010b, 8). What followed after the 1984 coup is that Biya

“centralize[d] and personalize[d] power even more than Ahidjo” (Dicklitch 2002). The

coup also influenced Biya’s plan known as a New Deal program meant to promote

“rigor and moralization”. The new program declared fight against corruption and

nepotism in the public service as its priorities. The program was not successful though

 

   

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as levels of corruption actually increased. In his first years after assuming office, Biya

allowed press freedom, but instead of addressing real public problems all criticism was

only directed at pointing out Ahidjo’s mistakes (Mbaku 2002). This way press freedom

served to fight political rivals rather than engage in real public deliberation of social

issues. Another change in the single party system was the introduction of the right to

compete within the single party. In 1983, Biya amended the constitution to allow

multiple candidates to run for presidency. However, procedures for qualifying were

very complicated: a candidate was supposed to present a petition signed by 500 public

officials, 50 from each of the 10 provinces. Moreover, “signing a petition to allow

someone to challenge the president would be seen as a sign of disloyalty” [because

public officials owed their jobs to the president/CPDM], therefore it is no surprise that

there never emerged a candidate to compete against Biya in polls (Mbaku 2002, 141).

The new rules were also introduced for electing parliament members. As a result, new

faces emerged but all candidates were screened and approved by the Political Bureau of

the CPDM. This system worked to ensure that only loyal individuals were elected.

To sum up, Biya’s administration demonstrates a great deal of continuity in both

elites and governing practices with Ahidjo’s regime. Executive power concentration,

extensive clientelism, and reliance on massive distribution of state resources are

characteristic elements of Biya’s neopatrimonial rule (Van de Walle 1994; Gabriel

1999). Ethnic balancing seems to be an important part of this governance mechanism:

“thanks to the policy and politics of regional and ethnic balance which Ahidjo

instituted, borrowing from and reforming the colonial legacy of ‘decentralized

despotism’, and which Biya has perfected, Cameroon has become a country much easier

to govern than it is to run a family” (Nyamnjoh 1999, 105-106).

5.3. The economic and political effects of the oil boom In the period between 1965-1985, Cameroon had a modest but relatively stable

economic growth performance with an average GDP growth rate of 5% though highly

inequitable one with high income inequalities and poverty. In 1984, 40% of the

population lived in poverty. Compared with other African countries, the Cameroonian

economy performed relatively well: GNP per capita was $880 ranking highest in the

region. The agricultural sector (coffee, cacao, and cotton) dominated the economy.

Agriculture employed more than 80% of the population and accounted for 32% of GDP.

 

   

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The export of cash crops accounted for 72% of total export revenue (Benjamin and

Devarajan 1985; IIEP 1990, 1).

Figure 5.1. Oil production in Cameroon

Source: U.S. Energy Information Administration

http://www.eia.gov/countries/country-data.cfm?fips=CM#pet

From 1978 to the mid-1980s, economic growth was fueled by an increase in oil

production from the offshore fields in the Rio del Rey basin involving French Elf-

Aquitaine. Production peaked in 1985 (see Figure 5.1). Cameroon began to receive

revenues from oil exports in 1978, when Ahidjo was still president (Figure 5.2). In

1980, oil revenues accounted for less than 5% of state income; between 1981-1985, oil

revenues accounted for nearly 40% of total government revenues (Subramanian 1994)

(see Table 5.4). The economy grew at an annual rate of 11.5 % from 1976 to 1981 and

about 6% from 1982 to 1985 (Subramanian 1994). During this period, Cameroon was a

significant (100,000 barrels per day) producer but many expected the oil boom to be

temporary and that the reserves would be depleted by the early 1990s (IIEP 1990).

0  20  40  60  80  100  120  140  160  180  200  

1980  

1982  

1984  

1986  

1988  

1990  

1992  

1994  

1996  

1998  

2000  

2002  

2004  

2006  

2008  

2010  

2012  

Cameroon - total oil production 1980-2012 (in thousand barrels per day)

 

   

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Figure 5.2. Cameroon: Petroleum income per capita in US dollars

Source: Ross 2013

The oil revenue had some of the Dutch disease effects (i.e. harmful effects on

tradable sectors) on the Cameroonian economy. Benjamin and Devarajan (1985) found

that the real exchange rate appreciation had a negative impact only on the traditional

agricultural sectors of cacao and coffee. Historically dependent on the cash crops (with

all foreign exchange being generated from exporting coffee and cacao), the

Cameroonian economy was vulnerable to commodity price fluctuations. Oil export was

seen as a good way to diversify the sectoral structure of exports. The oil sector was not

a substitute for agriculture (especially for generating jobs) given the oil sector’s enclave

nature, reliance on imported materials, foreign technologies and expertise. But oil has

one peculiar effect: it generates an influx of large revenues (the windfall effect) and

stimulates the incentives of politicians for vast public spending. In the year of 1982

when Biya succeeded Ahidjo, oil expenditure amounted to $1 billion (15 % of GDP)

(Benjamin and Devarajan 1985). Transfers and subsidies to “loss-making public

enterprises” constituted much of government expenditures in that period (Subramanian

1994).

0  

50  

100  

150  

200  

250  

300  

350  

400  

1961  1965  1969  1973  1977  1981  1985  1989  1993  1997  2001  2005  2009  

Petroleum  Income  Per  Capita  (Ross)  

 

   

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Table 5.4. Cameroon - Oil revenue

(in percentage of government revenue)

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

8.0 40.1 46.4 43.4 38.5 41.9 38.6 34.8 33.8 30.5 31.9 40.3 36.4 25.9 18.2

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

20.1 21.8 28.7 19.6 21.0 33.4 27.0 28.8 24.5 25.8 28.5 35.5 33.8

Source: Gauthier and Zeufack 2010, 56

The oil revenues had an impact on the economy primarily as a source of

government export revenues. And although the direct impact of oil on employment was

small (about 3,000 jobs in the oil sector in 1986), oil revenues had a substantial indirect

impact on employment (such as large construction projects) generating about 20,000

new jobs annually in the private and para-state sectors in addition to 8,000 annually in

the public sector (IIEP 1990, 87). A sizable share of oil income was used to finance the

increased number of civil servants and public/para-state enterprises (IIEP 1990, 84).

Government expenditure increased to satisfy the rising demands. Between 1984-86, the

government went on a spending spree increasing expenditure on transfers and pay rises

for civil servants and other expenditures (Gauthier and Zeufack 2009) (see Table 5.5).

By 1988, there were 150 parastatals. These parastatals served to reward positions of

power to loyal supporters and “were converted into prebends for Directors-General or to

serve other exclusive interests of the hegemonic class. Given this penchant of the

parastatals to promote political rather than economic goals, it is not astonishing at all

that, for the most part, they performed inefficiently” (Konings 1996, 249). Their

operations were financed by subsidies which by 1988 amounted to about FCFA 150

billion per year.

It is worth noting that oil revenue management was highly centralized, opaque

and secretive. In the 1980s, oil revenue was not included in the government budget,

except for tax of foreign companies, and most of it was saved on special bank accounts

abroad - compte hors budget-CHB – under the exclusive discretion of the president

(IIEP 1990, 23; Van de Walle 1994). Some believe that secrecy was “a scam” to cover

the transfer of funds to private pockets of the officials (Gauthier and Zeufack 2009).

As noted above, when Biya succeeded Ahidjo his position was less secure

because he had to subordinate the old elites from Ahidjo’s coalition. In addition, he was

 

   

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from the southern region, which was politically marginal under Ahidjo. Moreover,

residents of Biya’s ethnic region had high expectations in terms of improving their

living standards, so Biya had to accommodate their rising demands as well. To deal

with these rising demands, Biya acted to promote people from his Beti and Bulu ethnic

groups, concentrated around the capital Yaounde, to high-ranking positions in the

military, government, the party and parastatal enterprises (Dicklitch 2002). The number

of civil servants increased from about 80,000 in 1982 to about 180,000 in 1988 and the

majority of the new employees were recruited among the Beti (Konings 1996, 251-52).

Biya’s support coalition was still multi-ethnic, as during Ahidjo, but the Beti group now

had a dominant position. In sum, the role of oil wealth during the early period of Biya’s

presidency was important in a reducing the risk of potential elite rupture, empowering

the new authoritarian leader, and allowing him to strengthen his and his group’s

position in the elite network. Oil revenues controlled exclusively by Biya allowed him

to mitigate rising distributive pressures and accommodate elites (Van de Walle 1993).

Table 5.5. Cameroon - government revenue, oil revenue, and government

expenditure (in billions of CFA francs)

1978 1979 1980 1981 1982 1983 1984 1985 1986

Government revenue 200.6 226.6 338.9 491.1 620.5 711.4 765.4 966.1 808.6

of which Oil revenue n.a n.a 27.1 197.1 288.0 308.7 294.3 404.9 311.8

Government expenditure 181.1 207.0 334.3 469.0 550.3 663.3 767.1 982.0 1089.8

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

655.1 579.6 524.7 454.3 466.3 462.9 430.8 353.1 533.5 654.7

227.7 195.7 160.0 145.0 187.9 168.7 111.5 64.3 107.4 142.8

1004.4 768.5 624.8 642.9 597.9 518.8 457.2 534.8 632.3 665.7

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

828.5 862.9 928.1 1313.4 1251.4 1282.2 1321.1 1311.3 1541.4 1808.9 1867.9

238.0 168.9 194.5 438.3 337.5 368.9 324.1 337.8 439.2 643.0 631.0

789.5 758.7 838.9 1011.9 1211.5 985.1 984.8 1063.6 1195.4 1372.0 1541.0

Source: Gauthier and Zeufack 2010, 56

 

   

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5.4. The economic crisis and political liberalization When the world oil prices as well as prices for coffee and cacao fell in the mid-1980s,

the Cameroonian economy was hard hit. The terms of trade worsened in 1985 and the

oil boom period ended in 1986. GNP per capita in 1998 fell to the 1975 level of

$646. The exogenous shock had a negative effect on public revenues and the Biya

government had difficulty financing many of the publicly financed programs launched

under the New Deal program: “The state’s offices and treasury ceased to provide

orderly, profitable circuits for the well-connected, opportunistic patrons and clients.

Pay-offs yielded to ripoffs as public goods and services, above all parastatals, became

targets” (Krieger 1994, 606-607). As a consequence, state resources dwindled

significantly limiting the number of people who could receive benefits. Another effect

of the crisis was that Biya’s network was (perceived to be) less ethnically balanced than

Ahidjo’s and when competition for state resources increased by 1990, Biya’s Beti ethnic

group which constituted less than 10% of Cameroon’s population, but politically

dominant in the Center, South, and East regions were perceived as exclusive

beneficiaries of the limited resource (Krieger 1994, 606).

Several factors explain the crisis onset: unfavorable commodity prices;

inefficiency in public spending during the booming years (e.g. expansion of the public

employment sector and the unprofitable parastatals); the government’s policy failures in

reinvesting the gains from commodity exports to develop more sustainable profitable

industries; and corruption.

Biya largely continued Ahidjo’s economic policy of planned liberalism centered

on state-led growth and import-substitution policies but changed its name to communal

liberalism. This policy was not successful and contributed to the crisis. Economic

decline was further exacerbated by government inefficiency, mismanagement and an

overly-expanded public sector: “the negative influence of the public sector in the

economy – far more than falling world prices for Cameroonian commodities – has been

the principal cause of economic decline and lack of competitiveness” (USAID 1993, 3).

Corruption also contributed to economic decline. Cameroon is constantly ranked among

the states with highest levels of perceived corruption on Transparency International’s

Corruption Perception Index. The magnitude of corruption under Biya increased. Even

though there was corruption before Biya “it has never been as generalized, extensive

 

   

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and deep-rooted as it is today”. In today’s Cameroon top civil servants are driven by the

desire “grab as much as you can and as fast as you can before the party is over” [you

sacked] (Mbaku and Takougang 2004, 21). Konings (1996, 251-52) notes that

“corruption and rent-seeking had always been fundamental characteristics of the

regime; after 1984 they increased to the point of becoming dysfunctional. When this

political conjuncture was combined with a severe exogenous economic shock, the

system started to crumble.”

“La crise” and the pro-democracy protests in the neighboring countries triggered

protests in Cameroon and Biya had to open up the space for opposition: opposition

parties were legalized and multiparty elections introduced. Due to the crisis, popular

support for the president and the ruling party went down. In the early 1990s, forces

opposing Biya launched a civic disobedience campaign and a strike – operation “Villes

Mortes” (Ghost Towns) which lasted until January 1992. In 1992, economic conditions,

which already were poor, deteriorated still further: state revenues declined, GDP fell by

10%, living standards and incomes declined substantially.

In the first competitive parliamentary elections, deemed largely free and fair by

election observers, held in March 1992, the ruling CPDM won 88 seats (out of 180) in

the National Assembly. The outcome was not a victory for the ruling party. By forming

a coalition with a minor party the Movement for the Defense of the Republic (MDR),

the CPDM gained a slim four-seat majority in the legislature (Takougang 2003: 422).

The major opposition party Social Democratic Front (SDF, created in May 1990)

boycotted the elections. Other major opposition parties the National Union for

Democracy and Progress (NUDP) and the Union des Populations due Cameroun (UPC)

won 68 and 18 seats respectively (see Table 5.6).

In the presidential elections held in October 1992, Biya was reelected with only

about 40% of the votes and the opposition SDF candidate John Fru Ndi refused to

recognize the results because of the unfairness of the voting and electoral fraud (USAID

1993). Violence followed and Fru Ndi was put under house arrest. When he was

released in January 1993, parties continued to debate the election results. Biya

announced a “Grand National Debate” about further steps towards the country’s

democratization which took place during spring and summer of 1993 and involved

 

   

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major newspapers, state radio and TV. Despite broad anti-regime mobilization, the

opposition is believed to be weak, fragmented and easily coopted by the regime.

When the crisis began Biya was reluctant to ask for outside help (because he

mistakenly believed that the crisis would be short-lived and soon over). In fact, the

government initial reaction consisted of transferring the assets from the secret oil

accounts into the state budget. Gauthier and Zeufack estimate that in the first three years

after the crisis onset about US $900 million of the extra budgetary funds were included

into the budget.

Table 5.6. Parliamentary election results for Cameroon

(number of seats) Political party 1992 1997 2002 2007 2013

CPDM 88 116 149 153 148

SDF * 43 22 16 18

NUDP 68 13 1 6 5

UPC 18 1 3 / 3

MDR 6 1

/ 1

UDC / 5 5 4 4

MP / / / 1 /

MLJC / 1 / / /

MRC / / / / 1

Total 180 180 180 180 180

Notes: CPDM=Cameroon People’s Democratic Movement

NUDP=National Union for Democracy and Progress

UPC=Union des Populations du Cameroun

MDR=Movement for the Defense of the Republic

SDF=Social Democratic Front

UDC=Cameroon Democratic Union

MP=Progressive Movement

MLJC=Liberty Movement of the Cameroon Youth

MRC=Cameroon Renaissance Movement

*boycotted

Source: IPU Parline; Takougang 2003

 

   

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But when it became clear that the crisis would last longer, Biya agreed to

structural adjustments programs with the Word Bank and the IMF. The IMF provided

aid but the financial aid was conditional upon Cameroon’s accepting the terms and

conditions of structural adjustment programs (SAPs) including measures to improve

governance. In reality, however, SAPs produced doubtful outcomes and benefited the

state elites only. Instead of cutting public expenditure, Biya’s government continued to

use externally borrowed money and oil assets to expand the public sector and subsidize

the para-statals. As a result, because revenues decreased and debt service increased

(Subramanian 1994), the government was unable to meet its financial commitments

under the terms of adjustment conditionality. Reforms were implemented only partially

and in some areas were not implemented at all. Instead, “Ahidjo’s ‘enrichissez-vous’

[enrich yourselves] message a quarter century ago has given way to the aphorism often

used for elites in now distressed regimes: ‘apres moi le deluge’” (Krieger 1994).

Despite economic downfall, public administration employment expanded by

about 10% in the period of 1983-1993 (World Bank 1995, ii). Van de Walle (1993)

notes that the costs of the economic hardship were carried over to the masses and the

state elites were less affected. In 1993-95, urban unemployment rate was extremely

high. Informal sector became even more important for people’s lives. “Although

Cameroon’s experience in 1985-93 was extremely painful for almost all its citizens, the

pain was not evenly shared…By and large, the poor suffered first, while better-off

groups suffered relatively late in the process. A small group may not have suffered at

all” (World Bank 1995, 11-12). That small group less affected is civil servants and

public enterprise employees and the military: “Civil servants… experienced no pay cuts

until 1993. For most of the period they experienced rising real incomes as prices of

foods, rents, and many services fell. Some groups did not experience a loss of nominal

income: employees of public enterprises and the military, for example, still receive

unadjusted salaries, and have benefited in terms of real incomes as prices have fallen”

(World Bank 1995, 13).

Takougang argues that external pressure for democratization in Cameroon was

“symbolic rather than real” (2003, 432). Others note the inconsistency of IFIs

conditionality (Konings 1996). France provided economic support during the “Ghost

Town” campaign when the regime was seriously threatened, and whereas the US and

 

   

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the EU reacted to the 1992 presidential elections with criticism and ceasing aid, French

government expressed support and provided financial support. In January 1992, amidst

popular protests France supplied Biya with arms for preserving political order (Konings

1996: 263). The amount of French financial support to Cameroon during the 1990-92

period was FCFA181 billion. When Biya’s government had difficulties paying salaries

for civil servants, France was quick to lend a helping hand and in October 1993 agreed

to allocate a loan of FCFA15 billion to Cameroon (Konings 1996, 254). In 1994, France

provided financial aid to Biya’s government to meet IMF obligations. One oft-cited

explanation for why French supported the status quo is that French fear that victory by

an Anglophone candidate Fru Ndi will damage French economic interests in Cameroon

(Takougang 2003, 432) and might lead to instability. As one Western diplomat noted,

“Cameroonians are not yet ready to have a Bamilike president” (ICG 2010b, fn.117).

5.5. Biya’s post-crisis survivability As the tide of transitions to democracy was swayed by the wave of hardening of

regimes across the continent, Cameroon, too, was reverting to greater authoritarianism.

Country experts use various expressions to describe this process: “la démocratie

emballée / a democracy that lost its footing, une transition manquée / a failed transition,

la démocratie… piégée / booby-trapped democracy, une transition démocratique ratée /

a missed democratic transition, l’interminable transition / the never-ending transition,

and une transition qui n’a pas eu lieu/ a transition that did not take place” (Tande 2012).

When the economic situation improved, Biya reemerged as one of Africa’s

longest-serving presidents. In the dubious election boycotted by three major opposition

parties held in 1997, he won the fourth seven-year term with 93% of the vote and then

another election (fifth term) in 2004 with 75% of the vote, and again in 2011. In the

parliamentary election held in 1997, the CPDM received 116 seats in the parliament and

in 2002 it gained 149 seats. The results of the 2007 and 2013 elections confirmed the

domination of the ruling party (see Table 5.6).

All these electoral victories reflect the incumbency advantage that Biya has

enjoyed as president. Among the advantages, discretionary powers over oil revenues

have been key: “Because the regime maintains a monopoly over the nation’s purse

strings, it has been able to manipulate individuals, regions, ethnic groups, and even

some opposition parties in an effort to maintain control of Cameroon politics”

 

   

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(Takougang 2003, 428). The regime continues to maintain a bloated administration

which today counts more than 60 government ministries with key positions in civil and

military positions held by representatives of Biya’s own Bulu-Beti ethnic group

(Freedom House 2007). OECD (2012, 44) notes: “Regime stability has been built on an

extensive patronage network channelled through the structures of the state and the

ruling party. It is fuelled by corruption, looting of public finances and state-owned

banks, access to rents in the natural resource sector, and the growth of public sector

employment. Under the thin veneer of national unity, there is a constant juggling of

competing interests between different ethnic groups and regions.”

Since 2002, the country stepped into the second period of high oil revenues after

the first boom of 1979-1985. Because of the depletion of maturing fields and without

new discoveries (OECD 2007), oil production declined but since the mid-1990s it

slowed and stabilized around 90,000 barrels per day in recent years. Even though oil

output in Cameroon is moderate compared to large producers like Nigeria, its weight in

the domestic economy is still substantial. Between 1990 and 2005, oil accounted for

about 8% of GDP and 30% of total exports, and about 25% of total government revenue

(Cossé 2006, 8). While the economy is more diversified than in other oil exporting

countries, macroeconomic stability is highly vulnerable to supply fluctuations (Cossé

2006, 17).

As of 2007, oil contributed a large part of foreign exchange and government

revenue: 55% of export revenues and 33% of government revenue (Gauthier and

Zeufack 2009). It is commonly known that Cameroon’s oil revenue has been mired in

secrecy with very little publicly available information until recently. Calculating the

difference between the government oil revenues and the official budgetary figures,

Gauthier and Zeufack (2009) observed a large gap: the reported government figure of

oil revenue US$9.1 billion (2006) and the estimated total oil revenues of the

government is around US$19.8 billion. “This implies that around US$10.7 billion or

54% of oil rent have not been disclosed or transferred to the budget and might have

been appropriated by officials. The funds were used the resources to cater to the regimes

political clients and “after 20 years of adjustments and reforms, the oil sector remains at

the center of rent extraction, regime maintenance and corruption” (Gauthier and

Zeufack 2009, 47).

 

   

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Biya was reelected in 2004 and his term was supposed to be his last one. It

seems this put into force the lame duck syndrome – that is his rivals began maneuvering

in view of the potential power transfer. But Biya moved quickly to prevent this. In April

2008, he removed presidential term limits which allowed him to run again in 2011. This

decision was followed by riots in the streets and strikes (Economist 2008). All this

indicates the presence of tensions within the regime (ICG 2010b). There seems to be a

certain degree of elite continuity as well. Most of senior civil servants, ministers and

managers of public enterprises – all of whom owing their position and therefore

allegiance directly to the president – are chosen from the same pool of individuals over

the last 30 years that Biya has been in power (ICG 2010b, 2). “Through Biya’s

clientelist management (“If you support me, I will give you sinecures”) and the absence

of oversight and sanctions, the leaders constitute a “chop tribe”, which monopolizes the

country’s riches” (ICG 2010b, 2).

5.6. Conclusion As was shown above, oil wealth has been an impediment to democratization in seven

sub-Saharan African oil-producing states. Oil revenues reinforced personalist tendencies

that characterize most of these states. The in-depth study of Cameroon shows that the

Cameroonian leader used oil revenues to buy the loyalty of the state elites. Given the

extreme personalism of the Cameroonian regime and systemic corruption, a substantial

part of the oil windfalls could have been misappropriated by the government officials.

Oil revenues were heavily invested in unprofitable public enterprises to provide jobs for

supporters. When revenues declined in the mid-1980s, the government tapped into the

secret oil accounts to finance expenditures on the expanded public sector. During the

boom years, oil revenues provided Biya with the necessary resources to buy loyalty of

the elites, which in the Cameroonian case was compounded by ethnic-linguistic-

regional heterogeneity of the population. Oil revenues helped Biya appease restive elites

and to expand the patronage network to include representatives of his own region and

newly mobilized groups.

But an exogenous shock in 1985-86 hit the economy hard. Bad policy choices,

corruption and mismanagement of revenues during the boom years magnified the

economic crisis. Biya acted carefully to preserve positions and privileges of his support

patronage network concentrated in the state sector. As a result, government employees

 

   

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were least affected. Ordinary people who suffered the most were dissatisfied and went

to protest. Yet, financial aid contributed by France and international financial

institutions (IFIs) helped Biya’s government withstand the critical 1991-92 years.

Inconsistency in democracy promotion by western governments, aid conditionality by

IFIs and France’s economic and political support for the regime reduced the

effectiveness of Western leverage, as Levitsky and Way (2010) rightly pointed out.

When the economy returned to normal and government revenues increased in the late

1990s and especially since 2002 (due to high oil prices), the window of opportunity for

democratic change had been already missed and hegemonic authoritarianism set in as a

new equilibrium situation.

                       

 

   

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Chapter 6. Oil, Personalism and Regime Dynamics in Venezuela

6.1. Introduction On March 5, 2013 Venezuelan president Hugo Chávez died after ruling the country for

14 years. He came to power amidst the deep crisis of the 1959-98 democracy. His

presidency coincided with an unprecedented oil boom that generated a whopping USD

$1 trillion in total revenue (Corrales 2012). Bolstered by oil windfalls, Chávez launched

a project of radical transformation aimed at replacing the pre-existing party-based

democracy with the new, Bolivarian republic. What emerged in consequence was a

political system characterized by extreme presidentialism, neopopulism, and remarkable

personalism. While Chávez’s personalism was sometimes linked to his and his

associates’ plans to overhaul the previous regime and justified as necessary for carrying

out the revolutionary project of “Socialism of the 21st century”, there was nothing

inevitable about it. In this chapter, I show that the extreme personalism of the Chávez

regime and its maintenance can, at least partly, be linked to the dynamics in the

structure of Venezuela’s oil revenues. There are two ways in which oil contributed to

the personalism of the chavismo project. The first way through which oil made

personalism possible was the mechanism of democratic backsliding, whereby due to the

mismanagement of oil revenue by the Punto Fijo administrations the Venezuelan model

of democracy was discredited and perceived to be highly corrupt and unrepresentative.

This generated a set of conditions that enabled the emergence and eventual victory of a

populist leader. The second mechanism is related to the ways in which oil revenues

allowed Chávez to assault democratic institutional checks and to centralize authority in

his own hands. Next sections describe several strategies, from constitutional changes to

clientelist social spending that Chávez and his elites used to achieve their goals.

6.2. Historical background Any discussion of the recent history would be incomplete without appreciation of

history and its legacies. What follows is a brief description of Venezuelan political

history prior to the spectacular rise of Chávez in 1999.

6.2.1. Before the Punto Fijo pact Venezuela was an underdeveloped and backward country before the oil discoveries by

Shell were made in 1922. It has one of the world’s oldest oil industries dating back to

 

   

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the 1920s when the country was under the rule of Juan Vicente Gómez. Revenues from

oil concenssions provided Gómez with patronage resources necessary to centralize state

authority and maintain political dominance. At the same time, he took advantage of oil

windfalls to pocket for himself, his family members and cronies (Alexander 1965). His

death in 1935 put an end to 27 years of dictatorship, but that was not the end of

authoritarianism. Two generals, Eleazar López Contreras and Isaías Medina Angarita,

who succeeded Gómez used the oil revenues to satisfy the demands of expanding urban

classes vying for greater social participation (Coronil 1997). The coup d’état by a group

of young army officers in 1945 ousted the regime of General Angarita and propelled

Acción Democrática (Democratic Action, AD) to power. In 1947, the AD leader

Rómulo Gallegos was elected president with 75% of the vote, but survived in office for

only 9 months. This first short democratic interlude in Venezuelan modern history is

known as the “trienio adeco” (adecos are members of the AD). One of the key changes

introduced by the AD government was the revision of rent derivation formula in oil

contracts with western companies. A new 50-50 principle of equal sharing of profits

between the host government and the oil companies was introduced. The trienio

government was overthrown by another military coup. The dictatorship of Marcos Pérez

Jiménez, consolidated by a palace coup in 1952, was installed. Pérez Jiménez embarked

on a massive, and largely wasteful, spending spree following the declaration of the

policy of “sowing the oil” (“sembrar el petroleo”). Although the policy of “sowing the

oil” aimed to diversify the economy, in reality the oil earnings were spent on lavish

infrastructure construction projects, rather than the development of non-oil industries,

agricultural growth, or human capacity development. During Pérez Jiménez’s rule, the

Venezuelan state received $7 billion in revenue from the export of petroleum (Gall

2006). A remarkable feature of Pérez Jiménez’s rule was his uncompromising style of

leadership which, according to Coronil (1997), implied an attempt “to rule alone”.

In 1958, Pérez Jiménez was toppled in another military coup and the leaders of

three pro-democratic parties – the social democratic AD, the Christian democratic

COPEI (the Partido Social Cristiano de Venezuela), and the Left centrist URD - their

leaders being Romulo Betancourt, Rafael Caldera and Jóvito Villalba, respectively,

negotiated a peaceful transition to democracy which would last for the next 30 years.

Karl (1997) argues that oil played a positive role in Venezuela’s party elite-led

 

   

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democratization by allowing the major parties to peacefully come to an agreement with

regard to the sharing of power and then to respect their commitment to power sharing.

The first president Rómulo Betancourt known as the “Father of Venezuelan

Democracy” was elected president in 1958 and served until 1963 when he stepped down

in the first-ever civilian transfer of power. The “Punto Fijo system” was consensual,

allowing for participation of organized interests in the policymaking through corporatist

mechanisms and was generally designed to foster power sharing and cooperation,

although because of its alignment with the U.S. the initial pact excluded the communists

(who started a guerrilla movement).

The key institutional pillars of the pact included the following features (Monaldi

et al. 2006): 1) constitutionally weak presidency, 2) limits on immediate presidential

reelection, 3) absence of term limits on legislators which enabled party members to

develop long-term careers in Congress, and 4) proportional representation (PR) electoral

system for legislative elections. These elements along with the functioning of

centralized and disciplined parties helped to consolidate the party system during the

1960s and 1970s. The Punto Fijo system also restricted electoral contestation for

governors and mayors because of the fear that in the context of the democratic transition

opening this arena would lead to fragmentation and polarization. On the negative side,

this did not take into account the longer-term effect of restricting federalism which was

fully enacted only in the 1990s.

6.2.2. Punto Fijo and the crisis of democracy The “Punto Fijo system” was a limited, qualified polyarchy at the center of which stood

the two “deeply entrenched” political parties that operated in the context of electoral

contestation and broad public participation. These two parties from the times of

“trienio” were committed to the democratic principle of winning office through free and

fair contestation. In reality, both were clientelistic parties consisting of “multi-class

patronage networks” or patronage machines (McCoy and Myers 2004, 3). Generally

speaking, the AD-COPEI system was functioning as a “cartel-like arrangement”

(Monaldi et al. 2006, 9) and was also termed ‘partyarchy’ (Coppedge 1994) to highlight

the exaggerated weight of the two dominant parties relative to other parties and relative

to weak presidential powers. The two main parties essentially run the democratic system

as a pyramidal patronage network. The AD Party had the largest patronage network.

 

   

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Membership in the party had concrete benefits for its members (see e.g. Caracas

Chronicles 2003). The second largest party COPEI and the left-wing MAS run smaller

patronage networks. Government expenditures that went from top to bottom through

bureaucratic channels with superimposed patronage network were actually siphoned off

by successive layers of patrons before they reached the ultimate destination for which

they were allocated. So, the patronage system functioned as the structure linking clients

to their patrons, but was also prone to corruption that greased the wheels of patron-

client transactions. As Caracas Chronicles (2003, n.p.) notes: “while the [Punto Fijo]

system was inefficient, bloated, anti-democratic, and everything else, the system was

not totally useless - and in its amoral way, the corruption served as a rough-and-ready

way to spread the oil money around, to make sure it reached many hands, not just a

few”.

Because oil played a preeminent role in sustaining the Venezuelan

‘partidocracy’, it was also called a “subsidized democracy” (cited in Sylvia and

Danopolous 2003). In principle, similar to the dictatorship of Pérez Jiménez, the

policies adopted by the popularly elected administrations during the 1960-1970 resulted

in the wasteful spending of oil resources. Monaldi et al. (2006) argue that the factor of

oil revenues as such cannot explain the choice of the institutional arrangement

(democratic or authoritarian) since oil revenue distribution was used by the Punto Fijo

presidents rather as “a utilitarian mechanism to obtain support for the democratic

system” (Monaldi et al. 2006, 13). This also helps explain why the system collapsed

following the decline in oil revenue in the 1980s. The first three presidents used the oil

revenue responsibly. They invested in education, healthcare and infrastructure which

was reflected positively in the socio-economic outcomes.

Prudent fiscal policies were replaced by the spending spree with the

administration of Carlos Andrés Pérez (1974-1979) presiding over an unprecedented oil

boom. His administration invested heavily in existing state enterprises as well as

opening up new ones. A large portion of the spending was covered through borrowing

because of the government’s belief that the oil revenue will be enough to pay the

foreign debt later. The administration of Luis Herrera Campins (1979-84) that came to

replace Andrés Pérez had to adjust the fiscal policy because of the rising fiscal deficit,

but another short-lived surge in oil revenues forced the government to revise its earlier

 

   

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adjustment plans and again increase public spending. When the oil prices finally

dropped in 1983, the whole scheme of revenue distribution, expansionary fiscal policies

and debt accumulation crashed leading to a long and deep recession. The new

administration of Jaime Lusinchi (1984-88) erroneously believed that negative shocks

were temporary and acted to postpone structural economic reforms (Monaldi et al.

2006). So by the time Andrés Pérez assumed presidency for the second time in 1989,

the economy was in a dire state. To correct the imbalances in economic performance

Andrés Pérez’s team adopted a set of structural reforms. However, poor economic

performance already hollowed out the voters’ confidence in the ruling parties. Many

voters started to regard the system as rent-seeking and corrupt and therefore not

representing the interests of the wider society. The dominance of the two parties made

the system very rigid, bureaucratic appointments were based on party loyalty, governors

were appointed centrally by the president, and state sector positions were used as tools

to supply patronage to party followers. A set of institutional reforms including direct

elections of governors and other measures aimed at promoting federalism,

decentralization and opening of the party systems were proposed by a special

commission under the Lusinchi administration but were rejected by the AD party

leadership as too radical. The real motivation for refusal was linked to the AD fear to

lose control over the patronage network consisting of expanded regional and local

bureaucracies and basically the party thought the reforms would undermine the party’s

power. Some of these reforms were adopted later after the riots in Caracas in 1989.

Public expenditures were used by the Venezuelan government to construct

highways, offices, hotels and other items requiring high-cost physical capital

investments (Karl 1997; Gall 2006). The apex of wasteful spending was the first

administration of President Andrés Pérez (1974-79). His government oversaw the

stream of revenue that exceeded the total revenue Venezuelan governments had since

1920s combined together. The 1970 oil boom overburden the state with the new tasks

that the state bureaucratic apparatus was not ready to perform. Because of government

inefficiency fiscal expansion propelled corruption and waste. This in turn undermined

the legitimacy of the ‘pacted democracy’ and forestalled the collapse of the party

system two decades later (Karl 1997). Like Pérez Jiménez before him and Chávez three

decades later, Andrés Pérez I who announced his program Gran Venezuela (1974),

 

   

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concentrated all decisionmaking powers in his own hands and essentially ruled by

decree during his first year in office (Gall 2006). He expanded the public sector

employment by creating new public enterprises while discouraging any debate about the

righteousness of the chosen developmental course. By the end of his administration, the

opposition was asking: “Where has the money gone?” When the world oil prices

plummeted in the early 1980s, the Venezuelan oil revenue fell by 60%. The government

responded by borrowing abroad. As a result, foreign debt began to accumulate,

increasing fourfold to reach $33 billion by the late 1980s (Gall 2006). In another

surprising twist of events, the AD party candidate Andrés Pérez (1989-1993) who was

responsible for state interventionist policies and resultant corruption in the 1970s

reemerged in the late 1980s with the new program of neoliberal reforms El Gran Viraje

(The Great Turnabout). The package of reforms including the highly unpopular measure

to double fuel prices came with the IMF negotiated policies called the “paquetazo”. The

austerity measures hit the general populace hard and protest and riots in Caracas streets

followed in 1989 in which 400 people were killed in the events known as the Caracazo.

In 1992, military officers attempted two unsuccessful coups, one of them organized by

Lt Colonel Hugo Chávez. President Andrés Pérez was also trying to reform his own

party AD which by the time had become a large patronage machine. His neoliberal

reforms were not popular within the party either as party leadership saw that restricting

resources under state control would hurt their access to patronage and privileges

(Weyland 2003). When riots hit Andrés Pérez popularity, the party elite no longer

deemed necessary to support him, and he was impeached on corruption charges. He was

succeeded by the populist politician Caldera who by that time left the COPEI to run as

an independent trying to distance himself from the already unpopular party oligarchies.

Caldera did not condemn the Chávez coup in 1992 since the political parties, which he

tried to disassociate himself from, were widely seen as unrepresentative and corrupt.

This all added discontent to the already unpopular AD-COPEI rule and by the

election in 1998 the edifice of the entire “Punto Fijo” system collapsed. The fall of the

entrenched party-based system was also the result of the conflict between the two major

party machines and anti-system parties. As the AD and COPEI continued to fragment in

the 1990s, the pro-Chávez MVR in coalition with smaller leftwing and more

personalistic parties gained momentum. As a result, a system in which strong parties

 

   

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dominated for decades was replaced with the one in which “parties have become weaker

and thinner and the most important actor is the president” (Alvarez 2006, 19).

Generally, Venezuela’s economic growth performance can be divided into 3

periods (Monaldi et al. 2006):

1) between 1958 and 1978: high growth, good economic performance, declining

poverty;

2) from 1978 to 2004: poor growth, declining incomes, increasing poverty;

3) from 2004: new economic growth, improving living standards, decline in poverty.

6.3. Chávez: Oil and regime consolidation After being elected president Chávez put the criticism of the previous liberal democracy

at the forefront of his ideology and offered an alternative concept of “democratic,

participatory and protagonist model of democracy” that the new Bolivarian republic will

strive to implement. In contrast to the model of representative democracy of Punto Fijo,

the Chávez’s model was built on ideas of participatory democracy, especially direct

citizen participation in public affairs (Canache 2007). However, whether the actual

Bolivarian republic corresponds to the ideals of participatory democracy remains a

subject of debate because the democratic credentials of Chávez’s regime are now being

questioned. If the old system of partyarchy was criticized as being too bureaucratized

and rigid, the Chávez’s regime was deliberately under-institutionalized and highly

personalistic (Alvarez 2006, 21).

6.3.1. Oil dependence Venezuela boasts the world’s largest reserves of oil, and oil has traditionally been a

significant, if not defining, feature of the Venezuelan political economy. Until 1970s,

Venezuela was the world’s largest exporter of oil. Today it has 78 billion in proven

crude reserves with billions more extra heavy crude in the Orinoco belt. According to

more recent estimates, Venezuela surpassed Saudi Arabia in proven oil reserves with an

estimated 296.5 billion barrels as of end of 2011 (Rowling 2012).

This year (2014) Venezuela marks the 100 years anniversary since the discovery

of oil in 1914 in Mene Grande near the Lake Maracaibo (Tinker-Salas 2013). “Control

of the Venezuelan government implies control of the largest natural gas reserves in

Latin America and the largest deposit of oil in the world” (Tinker-Salas 2013). Not only

 

   

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is Venezuela a prototypical oil state, it is also a case of lesson drawing for other oil

exporters suffering from the oil curse. As Monaldi rightly observed, “Venezuela is the

textbook case of the worst economic policies if you want to avoid the resource curse”

(quoted in Green 2013).

Venezuela has been not just abundant in oil resources but it has been dependent

on it. Oil provides 80% of government total export revenue, about half of federal

government revenue and 1/3 of the country’s GDP (Bruce 2008; Alvarez and Hanson,

2009). The US is Venezuela’s key oil trading partner. Venezuela is the fourth largest

supplier of oil to the U.S. Chávez started steps to nationalize parts of the oil industry

controlled by foreign firms in 2006. This led to the increase of the state’s share in those

oil projects from 40% to 60%.

Figure 6.1. Venezuela: Petroleum income per capita in US dollars

Source: Ross 2013.

Despite the government’s efforts to diversify the economy, oil still dominates

the Venezuelan economy. Venezuela’s national oil company, the PDVSA, has current

production levels at between 2.55 to 3.2 million barrels per day (Alvarez and Hanson

2009). Figure 6.1 shows the dynamics in the Venezuelan oil wealth.

Venezuela’s oil history can be divided into four periods (Monaldi et al. 2006):

0  

1000  

2000  

3000  

4000  

5000  

6000  

7000  

1946   1951   1956   1961   1966   1971   1976   1981   1986   1991   1996   2001   2006  

Petroleum  Income  Per  Capita  (Ross)  

 

   

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1) 1958-1973: decline in the world oil prices, higher taxes on oil, more production,

gradual increase in oil fiscal revenues;

2) 1973-82: oil boom, windfall revenue, price volatility, nationalization of oil between

1974-76;

3) 1983-2002: low oil prices, volatile revenue;

4) 2003/4 to present: oil boom, windfall revenues.

Chávez’s Venezuela is different from other oil states in at least three aspects: first, it has

been running a large deficit. Second, it does not have a stabilization fund. Third, it

provides huge fuel subsidies by charging very low fuel prices; basically gasoline in

Venezuela is free (Green 2013).

6.4. Strategies of personalization Chávez used a number of strategies to accumulate power: constitutional changes,

delegative structures and hyperpresidentialism, control of the state oil company,

reversal of territorial decentralization of power and fiscal federalism, clientelistic

distribution of social welfare programs, institutional packing, “crowding out the

opposition”, populist rhetoric and policies, politicization of the army, corruption, and

deliberate avoidance of party institutionalization. All of these separately and

collectively fueled the personalistic tendencies in Venezuela. Below I describe each in

more detail.

6.4.1. Constitutional changes Soon after being elected president, Chávez initiated a series of changes in the

constitution that were passed in a Constituent Assembly in 1999 replacing the old 1961

constitution. In an election into the Assembly, which was approved by 90% of the

voters, Chávez supporters won 96% of the seats and passed a new constitution. He

disbanded Congress and replaced it with a new unicameral legislature. The Assembly

also appointed new Supreme Tribunal, Comptroller General, Attorney General, and

Ombudsman. All of these structures were filled with pro-Chávez supported picked up

by Chávez himself. Old opposition parties were under or unrepresented, which marked

a departure from the spirit of consensus seeking and pact making that characterized the

Punto Fijo era.

 

   

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These changes expanded presidential powers vis-a-vis the legislature and

judiciary. The new constitution weakened legislature powers by abolishing the upper

house and transforming the bicameral parliament into a unicameral assembly by

merging Senate and the House of Representative, and thus reducing the number of

legislative veto points and strengthened president’s powers by allowing the possibility

of immediate reelection, which was prohibited in the past (Weyland 2003, 828). The

president’s term was extended from five to six years. Chávez was re-elected as

president according to the new Bolivarian Constitution in 2000. In addition, Chávez was

granted significant decree powers subject to approval of enabling law by the legislature.

Another major change granted the president the exclusive right to decide on military

promotions without legislative approval. The new constitution was also “the most

heavily presidentialist constitution in Latin America” (Corrales and Penfold 2007).

While these changes were made before the oil boom and reflected Chávez’s

insecurity in office, steps toward extreme personalization, such as the removal of term

restrictions, were taken during the oil boom. I regard the desire to remove presidential

term limits, extend term duration and stay in office beyond constitutionally mandated

terms as the most accurate indicator of personalism or its highest stage. Similar attempts

were made in Nigeria under Obasanjo. All these constitutional changes reflect the

president’s strong desire to concentrate power. Oil fueled this motivation by creating the

incentives for wealth and power maximization and provided resource advantages to the

incumbent.

Later Chávez also established control of the courts and the electoral commission

as well as all major media channels. Chávez used a number of tricks to stifle opposition

including the closing down of independent TV channels, intimidation of opponents and

dissenting judges, utilization of state administrative resource for electoral campaigns.

Another strategy allowed by Chávez’s control of courts and other major institutions was

discriminatory legalism following the maxim: “For my friends, everything; for my

enemies, the law!” (Weyland 2013).

6.4.2. Delegative tendencies Another important indicator of personalization is the elimination of horizontal checks,

indicating the increase in delegative tendencies (O’Donnell 1994). The idea to do away

with institutional checks has its origins in the chavista circles before Chávez came to

 

   

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power. While in prison after the aborted coup in 1992 Chávez wrote that in reality “no

separation of powers exists in Venezuela, since political parties, deliberately violating

their function as intermediaries between society and the state, conspire to usurp popular

sovereignty and allow the [national] executive to assume all state power” while also

claiming that the legislature is “subservient to the executive while appointing all

members of the judiciary” (cited in Ellner 2011, 425). Although the intellectual

inspiration for centralized control originated in the revisionist Marxist ideological

debate of the 1980-1990s, the implementation became possible only in an environment

of deep public distrust of Punto Fijo-era politicians and after the acquisition of power

and subsequent reforms supported by the massive stream of oil revenues since around

2003. Ellner is right observing that “Chávez’s notion of state power and centralized

control presaged the concentration of power in the executive branch of government that

has characterized his rule” (2011, 426). However, it seems implausible that he would he

be able to realize his centralization of power project had there not been a fertile

environment for the emergence and support for such a change and, most importantly,

without resources afforded by oil.

Around 2009, some leftwing intellectuals, especially Juan Carlos Monedero,

started to notice and warn Chávez of what they saw as the tendency to concentrate too

much power in his hands. They called it “hyper-leadership”. Chávez refuted such claims

saying: “What does ‘hyper’ mean? It means something that is oversized (...) As a result,

I should limit my leadership. Well, that’s what the enemy wants. Do not you think so?”

(El Universal 2009).

A powerful executive is a feature of the growing tendency among Latin

American states to develop what O’Donnell (1994) described as delegative democracy,

characterized by “hyperpresidentialist” leadership, extensive use of decree powers and

reliance on vertical electoralist mechanisms sometimes at the expense of horizontal

checks.26 Chávez’s Venezuela certainly fits this description.

6.4.3. Subordination of PDVSA to presidency and changes in oil governance It seems control of wealth was indispensable for political power concentration achieved

by Chávez. Oil provided the major source of state revenue during his tenure. As the

popular saying goes, “who controls PDVSA controls Venezuela”. PDVSA (Petroleos de                                                                                                                26 For an alternative perspective, see Ellner (2001).

 

   

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Venezuela S.A.) is the state-owned petroleum company in charge of oil production and

exportation. It is one of the worlds largest oil companies along with Saudi Aramco and

ExxonMobil. It expanded its refinery capacities after buying a US-based petroleum

company CITGO.

In an explanation for the Venezuelan paradox of plenty, Corrales and Penfold

(2011) highlight the erosion of institutional checks and balances capitalizing on the

changes in and around the PDVSA, the previously autonomous corporate entity. They

argue that Chávez’s entrenchment would not have been possible without the steps taken

by Chávez to weaken the institutional checks and balances prior to the oil boom.

One of the arguments in support of the thesis that oil did not hurt democratic

transition in Venezuela is that it has the experience of democratic government (the

trienio) and Venezuela nationalized oil in 1976, almost two decades after the first

democratic elections. While nationalism was a feature in 1970s, following the troubles

after the oil price crash in 1986 and beginning in 1989 Venezuelan leaders took the

course towards liberalization of the oil industry through the Oil Opening policy or

Apertura Petrolera (Mommer 1998). The objective was to open the industry to foreign

investors including privatization of parts of the PDVSA. Amidst the turmoil of the

1980s and 1990s, PDVSA was “the only profitable, stable and dynamic institution”. But

it also was a “state within the state” due to the amount of financial resources it had

under control. Chávez reversed the Oil Opening policy, passed a new hydrocarbon law,

confirmed constitutionally that PDVSA belongs to the state, and expropriated or re-

nationalized some of the previously privatized companies under the auspices of

PDVSA. In fact, since the mid-2000s, he nationalized about 100 major and 900 minor

firms (Corrales 2012). These actions met resistance from the PDVSA’s top executive

management, the technocratic elite of the company, which led to a major strike in 2002.

The PDVSA top managers supported the 2002 coup, which temporarily ousted Chávez

from office in April 2002. They also supported the opposition protest and lockout

during the same year. Chávez stood the challenge and responded by sacking 18,000

managers and technical personnel of PDVSA from the company.

After subordination of the state oil company to Chávez has been achieved, the

company was turned into a “Bolivarian state enterprise” (Bruce 2008), “a bloated, all-

purpose development agency with which to dispense largesse” (Economist 2012). And

 

   

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the new president of PDVSA Rafael Ramírez was quoted as saying that Chávez was

planning to use the company to “transform Venezuela from an oil sultanate to a

productive society within a socialist framework” (cited in Alvarez and Hanson 2009).

6.4.4. Rolling back on decentralization reforms and recentralization Another area affected by Chávez’s desire of unlimited power was regional and local

government. In this area, Chávez favored the centralization of authority,

noninstitutionalized intermediation directly linking locales to the president. This was

made easy by the rentier nature of Venezuelan state, i.e. fiscal autonomy of the state

relieved the need to devolve authority to regional governments for fiscal purposes.

Many decentralization reforms were reversed and the president now could use greater

fiscal dependence of regional government on the center to punish political opponents.

In the 1990s, many Latin American governments implemented reforms to

promote political, administrative and fiscal decentralization. Venezuela also introduced

a number of reforms to devolve authority. After his election, Chávez reversed this and

introduced a new concept of territorial administration stressing the role of local

communities and direct links between local government and the presidential office in

Caracas. The effect of this was that instead of decentralization that the Chávez’s policy

aimed to achieve the new governance model recentralized authority. Local communities

that sprang all across the country were used to weaken the political opposition that was

in control in some regions. In the past, gubernatorial victories allowed opposition

parties COPEI and AD to survive after the demise of the partyarchy system. For

example, the leader and major opponent of Chávez in the last decade Henrique Capriles

built his political career and opposition stronghold in the state of Miranda. Opposition

parties sometimes won in economically strategic states like in the major oil-producing

state Zulia. Chávez was calculating rationally that leaving subnational governments on

their own could be too risky. Revenues previously allocated to subnational governments

were taken away or reallocated to reward regime supporters (Eaton 2013). Similar

strategies of fiscal and administrative centralization can be observed in other major oil-

producing states with the federalist structure such as Nigeria and Russia.

While it can be said that some of Chávez’s reforms in the local government area

enhanced citizen participation in local affairs, the national policymaking has remained

extremely concentrated in Chávez hands and top-down. Because of the weakness or

 

   

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near absence of intermediary institutions, deliberately disfavored by Chávez, people

were deprived of the opportunity to influence national decision-making. The model of

Chávez rule was inspired by the ideology of radical democracy and Jean-Jacque

Rousseau in its emphasis placed on direct popular participation and majority rule

(Ellner 2011). Both radical democratic and social democratic elements of the Chávez

presidency were inimical to institution-building and institutional mechanisms of interest

intermediation.

6.4.5. Social programs and clientelism Perhaps one area in which the effect of oil on personalism can be clearly observed was

social policy. Chávez spent billions of oil money on social programs, yet much of the

funds were allocated on the partisan loyalty basis rather than some universalistic

principles. The arbitrariness in social spending often meant that resources were used as

patronage to reward the regime cronies, to cultivate the sense of loyalty to the president

such as when the president took credit for something he has not done much to generate

(i.e. oil rents). Social benefits presented as gifts of president stimulated populist beliefs

and paternalistic attitudes.

The area of social welfare spending was largely left untouched in the first years

of Chávez’s rule. Policies of previous administrations were kept. Before the strike and

the April coup in 2002 (removing Chávez from office for 36 hours), Chávez was not

concerned with social programs so much and in fact cut some of the social programs

from previous administrations. Weyland argues that Chávez did not have a clear

political program in the initial years after coming to power. When the new constitution

was passed in 1999, the Venezuelan economy was still in deep crisis carried over from

the mismanagement of oil and policy failures of the Punto Fijo policymakers. And as

Chávez himself admitted, “We had no money at all; the little there was they [the

oligarchy and former political establishment] took with them when they left... The oil

price was very low due to a foolish policy that ran totally against Venezuelan interests...

There was no money to pay the teachers and government employees” (Guevara 2005,

24).

In his early years around 1999, Chávez pursued a somewhat conservative fiscal

policy. The only program aimed at helping the poor sectors that employed more than

 

   

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60,000 soldiers from the regular army forces was Plan Bolivar 2000 started in February

1999 (figure from Guevara, 2005).

This changed dramatically after the April coup and a two-month strike in 2002-

2003. These two events triggered radical steps from the government and prompted it to

implement the socialist welfare model (Ellner 2011). So the launch of social programs

was a reaction to the political events of 2002, i.e. the major strike and the coup d’état.

These two events indicated the strengthening of political opposition forces to Chávez’s

rule. Just months after the opposition lockout, in the late 2003 as the oil prices surged,

Chávez launched social programmes or missions (“misiones” in Spanish) in the areas of

healthcare targeting the underprivileged in the barrios (the Barrio Adentro Mission),

education (Robinson, Ribas, Sucre Missions) and food distribution (MERCAL)

missions involving Cuban specialists that were being planned already in 2001. Massive

expenditures followed the surge in oil prices in the early 2000s, despite the IMF advice

to restrain fiscal expansion. Funds for these numerous “misiones” were provided

through “opaque and non-budgetary mechanisms” of transferring billions of oil revenue

from the state oil company to special funds under the president’s control (Penfold-

Becerra 2006, 5). The money spent through the misiones programs partly went to

political purposes such as “buying votes” and partly distributed to the poor sections of

the population. As such, social spending helped Chávez strengthen electoral and

political support from these sections of the population that were previously politically

excluded (Pendfold-Becerra 2006).

Chávez’s social missions were very popular and allowed him to garner support

of poor and underprivileged constituencies (Perez 2013). While it is without doubt that

Chávez gained most support from poor voters in 1998 and the wealthiest voters always

voted against him, it seems in subsequent elections most support for Chávez came from

middle classes (Lupu 2010). A more plausible explanation is that support for Chávez is

multi-class based, as argued by Weyland, and which is commonly found in populist

governments. This was helped by Chávez’s anti-oligarchic rhetoric and pro-poor

redistribution and clientelism after the 2002 coup aimed to mobilize support of the

underprivileged classes. But as some of Chávez social and economic policies benefitted

middle classes, Lupu concludes that “a broad coalition of the poor, the middle classes,

 

   

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and even some wealthy sectors, have supported Chávez at the ballot box” (Lupu 2010,

27).

However, social policy seems to be targeting excluded groups such as

underprivileged parts of the population (Ellner 2011). As Hawkins (2010) rightly

pointed out, many of these missions would have been impossible without the

skyrocketing rise in oil revenues in the period after 2003 and especially from 2004

onward. Most of these social programs are financed by contributions from PDVSA,

which though experienced dwindling investment and deteriorating infrastructure, have

sufficient funds to provide the needed resources.

Chávez victories are difficult to imagine without his use of public spending

funneled through the huge patronage machine that buys political loyalty of the voters.

This spending increases especially during election campaigns, is what can be called a

“spending orgy” (Shifter 2012). Anti-poverty programs brought the fruits, the poverty

levels dropped significantly and literacy improved.

Chávez spent an estimated $300 billion on “social development”, i.e. education

and healthcare, during his presidency (James 2012). This spending spree was funded by

the revenue stream of more than $981 billion that PDVSA earned between 1999 and

2011. Poverty dropped from 50% in 1999 to about 32% in 2011 (James 2012), a

significant reduction, but still less than could have been achieved given how much had

been spent.

The role of funds taken from PDVSA by the executive for spending is hard to

overestimate. Contributions tripled from $16.5 billion in 2004 to 58.6 billion in 2011.

Not all of it spent on social policies, but billions spent to buy weaponry from Russia.

University enrollment jumped up, a new tuition-free Bolivarian University was

established, but the biggest part of expenditure went to pay and keep an expanding

public sector, the bureaucratic apparatus. The public sector almost doubled, the number

of public employees increased from 1.3 million to 2.4 million during Chávez’s tenure.

Since 2005, public sector employment expanded from 15 to 19 percent of the labor

force (Corrales 2012). PDVSA which had 40 thousand workers when Chávez became

president now has 120 thousand employees (Monaldi 2014).

Chávez’s government has also been criticized for increasing criminal murder

rates, grows of slums, falling quality of public infrastructure. Because of “government

 

   

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inefficiency, ineffectiveness, incompetence” (quoted in James 2012). The Venezuelan

economy remains highly oil reliant and unsustainable. If oil prices fall, “there is no

productive engine to feed us” but while they are high fantasies can be paid for” (James

2012).

6.4.6. Elite recruitment, institutional packing As Chávez was expanding the public sector using the oil revenues, the key criterion for

being included or excluded was clientelism. It was common for Chávez to replace state

officials and public employees with those loyal to his Bolivarian project. For many

positions, he appointed loyalist confidants often from the military, which he trusted

more, rather than through meritocratic selection. As political loyalty has become the key

criterion for inclusion, the quality of state management deteriorated and the state

entered “an advanced stage of decomposition” (Weyland 2001, 81).

6.4.7. Electoral competition Or in other words, “crowding out the opposition” (Corrales and Penfold, 2007). Under

Chávez, elections turned into personality-based contests used highly populist strategies

in their campaigning. Oil supported many of Chávez’s populist and clientelistic

redistribution policies making the electotral arena highly unfavorable to opposition

parties.

With the rise of Chávez, the elections did not become a plebiscite but were

meaningful events. Yet, what was now different from contests was that oppositionists

had to compete in the environment that lacked a level playing field. The electoral arena

has favored the ruling party candidates through institutional manipulations, media

control, and large resource disparities. In other words, to use Levitsky and Way (2010),

elections were free but not fair.

Several stages in the “election game” can be identified, in late 1990s until 2003

the initial years after Chávez elections when traditional opposition parties were divided

and electorally weak. But the opposition tried to mobilize discontent by organizing a

major strike in 2001. The strike was followed by a coup attempt in 2002. As the coup

was associated with the opposition plot, this had the effect of weakening opposition.

But opposition still managed to collect enough votes for a recall referendum in August

2004 which Chávez won: 59% against removing Chávez, 41% in favor.

 

   

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The second period covers the time after the coup when the opposition was weak

and impotent. In 2005, Chávez’s control of all major government institutions was so

“complete” that opposition parties decided to boycott the legislative elections held that

year (Corrales and Penfold 2007). Around the same time, Chávez had the parliament

pass a ruling on “enabling powers” allowing him to rule by decree for 18 months from

February 2007. This demonstrates how Chávez began to abuse the concentration of

power in his hands. The ongoing oil boom and the weakening of representative

institutions contributed to this personalization of power. In Venezuela, what began as a

push to cleanse the government of entrenched oligarchies in the late 1990s gradually

degenerated into an increasingly authoritarian system in which corruption proliferated.

The fact that political deterioration followed the start of an oil boom is not a mere

coincidence. The more the Chávez regime benefited from oil, the more it exploited the

public resources to marginalize the opposition and weaken intermediaries in the civil

society. Chávez cracked down on all major organized interest groups including trade

unions, business associations, dividing them and often staffing with loyalists (Weyland

2001).

Following the autocratization of the Chávez’s rule around mid-2000s, political

opposition was completely disempowered. By early 2006,

“the opposition had virtually capitulated. Every one of its strategies had failed. Massive mobilizations, labor strikes, the recall, appeals to the international community, and electoral participation had produced nothing but waning power and fewer concessions from the government. The opposition ran out of options and gas at least in part because in Venezuela, as in any oil-exporting country in which the state dominates the petrochemical sector, the government controls the fuel both literally and figuratively, and can give it to friends while keeping it away from foes” (Corrales and Penfold 2007, 103).

After 2004, clientelism and the emasculated institutions reinforced each other.

Weakening of checks expanded the government’s scope of discretion over spending

allocations allowing for high patronage spending and expansion of clientelism. Growing

clientelism in turn enabled to buy political support reducing the need in institutions.

Chávez spent the petro-dollars through highly non-transparent channels such as special

funds under the executive discretion and without legislative oversight. According to

 

   

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some estimates, US $15 billion from the recent oil boom is believed to have been stored

in these secretive funds. The funds, such as the National Development Fund (FONDEN)

under executive control was set up in 2005 and accumulated funds from both

international reserves and transfers from PDVSA. All these transactions are off-budget.

Most expenditures from these funds followed the clientelistic logic to reward

supporters. This left the opposition without access to state resources and skewed the

level playing field (Corrales 2011). Chávez’s peak of popularity came after his

reelection in 2006, when he won 63% against the opposition candidate Manuel Rosales

who got 37%. His most anti-democratic measures were taken after this reelection. He

nationalized many sectors of the economy, clamped down on a popular private

television channel and emasculated elected offices that were controlled by opposition

forces.

The third period is when opposition gains momentum between 2007-2010. This

also coincided with the fall in oil prices in 2008, but only for a short period. The

opposition’s recovery was happening in an increasingly authoritarian and hostile

political environment, in which, for instance in May 2007, a major opposition television

station RCTV was closed down. During the same year, the Chavistas in parliament

ratified a constitutional reform package that would further consolidate presidential

powers, including indefinite re-election for presidency and the right to declare state of

emergency to restrict certain civil rights as well as restrictions for recall referendums in

the future. But the reform package did not pass the referendum.

As the opposition gained confidence after defeating Chávez’s proposal to scrap

the term limits in 2007, they also had a better showing in the 2008 regional elections.

Pro-Chávez candidates got the majorities in governorships and mayoralties - winning 17

of the 22 governorships and 264 of the 326 mayoralties, opposition candidates won the

rest, wining in some important constituencies such as the Caracas metropolitan area

(Hidalgo 2009). Chávez’s drive to abolish term limits stand in sharp contrast with the

1961 constitution that prohibited reelection. The opposition gains and the economic

crisis convinced Chávez that it was time to push for constitutional change agenda.

When prices recovered, Chávez called for another referendum on term limits and won it

this time. The referendum removed term limits for president and all other elected

offices.

 

   

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Opposition made significant gains in the parliamentary elections in 2010. But

due to the government’s expansive fiscal policy and high spending, presidential

popularity was very high. In lead-up to the 2012 elections, there were six candidates

running but the main competition was between two main candidates, Chávez as the

candidate of the Great Patriotic Pole (GPP) coalition led by the United Socialist Party

(PSUV) on the one hand, and governor of Miranda Henrique Capriles of the Democratic

Unity Roundtable (MUD) on the other. The MUD was formed from previously

disunited opposition group from both the right and left (Economist 2012). Capriles is a

governor of Miranda State, which encompasses large parts of Caracas.

Interesting to note, that being aware of the unpopularity of neoliberal paquetazo,

Capriles made sure that his proposed package of reforms was not seen as neoliberal

reform programme and even said he would keep the chavista social programmes intact

(Hidalgo 2013). In the October 2012 elections, he ran a very effective campaign

including advancing a social agenda akin to the moderate left model of Brazilian ex-

president Luiz Inacio Lula da Silva, without refuting that Chávez programs benefitted

the poor. Capriles remained non-confrontational throughout the campaign (Shifter

2012). Although Chávez won the election, he died in March 2013, and was succeeded

by a handpicked candidate Nicolas Maduro.

6.4.8. Personalism and the risks of diversification Chávez’s economic policies are poorly designed, “misguided” and shortsighted

(Weyland 2001) and despite the benefits of high oil prices, Chávez failed, just like his

predecessors, to redirect oil wealth to promote a more diversified structure. Chávez’s

popularity derives from the failure of the previous regime to deliver stable economic

growth and rampant corruption of the 1970s. Venezuelans believed that they should be

rich if only oil wealth could be properly managed and benefits fairly distributed. The

fact that about 70-80 percent of the people lived below poverty made it appallingly clear

that something was wrong. They blamed their politicians and elites of organized

interests in labor or business for their misfortune. This was the general perception of the

1990 that allowed an anti-system politician Chávez to get popular very quickly. Yet it

seems that despite their failures Punto Fijo presidents were willing to reform as, for

example, Andrés Pérez (II) who initiated a package of austerity measures, though

unsuccessfully.

 

   

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6.5. Populism Populism is personalistic by definition, and oil clearly boosted populism in Venezuela.

Chávez ruled as a populist leader. Populism, as Weyland explains,

“revolves around personalistic leadership that feeds on quasi-direct links to a loosely organized mass of heterogeneous followers. Bypassing or subjugating intermediary institutions such as firmly organized parties, the leader -- often a charismatic figure -- establishes face-to-face contact with large numbers of citizens” (Weyland 2013).

Chávez’s weekly show Alo Presidente is a good illustration. Populism is driven by the

logic of personalism that does not tolerate institutional intermediaries. This same logic

compels a populist ruler to assault and dismantle institutional checks and balances. And

even though populism can be found in all sorts of regimes, it can flourish particularly

lavishly when state leaders enjoy discretionary control of resource rents.

Hawkins (2010) sees Chavismo as a populist movement in which chavismo is

more ideational, a worldview and a discourse, rather than clientelistic, and results from

the disappointment with the corruption of the previous system, with the failure to

implement rule of law. Chávez also claimed popular veneration and created a cult

around his personality. After his death, the successor leadership of Nicolas Maduro has

gone on to devise a civil religion around the figure of Chávez (Hernáiz and Smilde

2014).

6.6. The role of the military There is an element of personalism in bringing the military into politics. The military

basically loses its institutional autonomy and, as a result, is more tightly and directly

subordinated to the chief executive. The role of the oil boom is less clear here although

it is legitimate to say that oil affords more things, such as larger defense budgets. Civil

control of the military varied since the Punto Fijo pacto. During the first administrations

two parties were successful at controlling the armed forces thanks to a set of

institutional arrangements aimed at fragmenting the officer corps and financial inflows

in military budgets (Trinkunas 2002). However, beginning in the 1980s civilian control

began to weaken which allowed for two coups to occur in 1992. The plunge in oil prices

that began in 1982 led Andrés Pérez (II) to adopt unpopular policies that also meant

 

   

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cutting defense budgets and benefits for officers. This draining of budgets contributed

to the widening of the cleavage between senior and junior officers as the juniors started

to perceive the senior echelons as corrupt due to their links to party leaders who were

generally seen as highly corrupt. One such group of disgruntled officers formed a group

in 1983 called Movimiento Bolivariano Revolucionario 200 (MBR-200) with

Bolivarian inspired nationalist and populist beliefs. President Perez knew about its

existence but tolerated it. After Andrés Pérez was impeached by Senate for corruption

charges, Rafael Caldera was elected president in 1994 with the plans to restore

confidence in the institutions of Punto Fijo. Yet, recession persisted and inflation rose

and poverty levels actually increased. President Caldera tried to put the military back

under civilian control and adopted measures to increase pays to keep the military

officers satisfied. The previous institutional arrangements were radically altered with

the election of Chávez, himself a military person. The key change concerned the level

of politicization of the military. As noted above, Chávez employed the military for the

purposes of internal security, public development and state administration. Military

officers were appointed to several key positions in the government. Chávez also

removed all who were suspected of disloyalty from key positions. The army personnel

were employed for carrying out social missions and Plan Bolivar 2000. These

programmes were funded through oil revenue. Notably, Chávez stopped allocation of

the funds initially allocated for regional governments and instead disbursed these funds

to military garrisons as the main executors of Plan Bolivar. Another key institutional

change concerned political oversight of the military which now was under sole

jurisdiction of the president. According to the new constitution, only president can

approve military promotions of colonels and generals eliminating legislative approval

required in the past. Chávez also abolished the previously administrative structure with

decentralized command in the military. In short, Trinkunas concludes, “The

Constitution of 1999 provides for personalized control of the military by the president”.

Norden (2008) argues that the military has been committed to democracy in

Venezuela and some factions supported Chávez coup because they believed that the

system has become too closed. According to the 1961 constitution, the military was

confined to be “apolitical, obedient and non-deliberating” institution responsible for the

stability of democratic system (cited in Norden 2008, n.p.). The new Bolivarian

 

   

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constitution changed the status of the armed forces, relaxing the limits on its political

involvement and actually giving it the right to vote. It also clearly envisaged the

functions for the military in domestic development and keeping internal order. In other

words, the military was politicized and granted a role in implementing the revolutionary

programmes of the chavista. As a result, the military personnel were mobilized to work

on repairing schools and hospitals, working in social missions and public health

providers.

6.7. Corruption and mismanagement A large part of oil revenues under Chávez was transferred into off-budget funds

controlled personally by the president. This opened opportunities for corruption. State

agencies in Venezuela are notorious for their weak competence and mismanagement.

The country is ranked at the bottom of Corruption Perception Index, and there is a lack

of transparency regarding the spending of oil revenue, it is not even clear how much the

government has spent. What is clear is that billions were transferred from the PDVSA

to the off-budget FONDEN. In 2007 alone, the national oil company spent as much as

$14.4 billion on social programs which is a substantial jump from $6.9 billion spent in

2005 (Alvarez and Hanson 2009). It is also notable that just like governments in some

other oil-rich states, Chávez spent the oil windfall on military budget. In deals with

Russia, Venezuela spent about $4.3 billion on weapons (Alvarez and Hanson 2009).

6.8. Political movement, not a party The MVR that was officially registered in 1997 to back Chávez’s candidacy for

president in the 1998 elections was defined as a movement, rather than a political party,

and acted as both an electoral machine and “hit squads”.27 Chávez deliberately avoided

party building and instead created a number of “ephemeral” organizations to perform

specific electoral or political services, operating largely as “task forces”.28 Chavista

organizations were largely informally organized and were “superimposed on formal

authorities” (Alvarez 2006, 22). The status occupied by Chávez in these structures was

both the president of the party and the leader or “the supreme commander” (self

reference) of the informal structure. As the leader Chávez did not tolerate factionalism

                                                                                                               27 The MVR was formed as a result of the transformation of a military group Movimiento Bolivariano Revolucionario (MBR) into a political movement 28 For a listing of these organizations, see Alvarez (2006, Table 2, p.23).

 

   

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or internal dissidence. Those who hold a difference in opinion were either publicly

reprimanded or dismissed. For example, one of the co-founders of the MVR Luis

Miquilena was dismissed from the party for criticizing some of Chávez’s policies.

Appointments were personally done by Chávez often during one of his weekly televized

broadcasts. So “tactical” forces tasked with a specific mission were not overseen by

formal organs of the party, but instead reported directly to the president. Rank and file

members were organized into “circulos bolivarianos” as the basic cells of the MVR’s

informal structure. These circles, directly acting under the president’s control, were

involved in various tasks from ideological education electoral mobilization to

sometimes intimidation and violence. Their primary mission was to “to defend the

revolutions by all means”. These circles were abolished and reorganized into “Electoral

Battle Units” (UBEs) in 2004-2005. Such an adaptable and flexible structure helped

preserve the charisma of Chávez and also blocked the institutionalization of party

leadership, its consolidation into a bureaucratic organization capable of constraining

Chávez’s authority and challenge his dominance (Alvarez 2006).

6.9. Conclusion Chávez’s rule was characterized first and foremost by extreme personalism, and

unusually high concentration of power in the president’s hands. While high personalism

was a feature of initial years preceding the oil boom from 2003, personalistic tendencies

reached extreme levels during the oil boom. Oil certainly alleviated the need to tolerate

power-sharing like the one that existed under the Punto Fijo regime and helped

consolidate an extremely personalized system of government. The antecedent

conditions of democratic erosion and the failure to build a diversified economy by

previous governments as well as Coronil’s contention about the traditional perception of

the state as a magical state were perhaps unique to Venezuela and served as the enabling

conditions for the outcome.

The personalization under Chávez was so extreme that he was compared to

traditional caudillo rulers of the nineteenth century. Former communist guerrilla leader

Teodoro Petkoff described Chávez’s rule in the following words:

“Today all power is in Chávez’s hands. He is distrustful and does not consult with many people. He appoints and dismisses cabinet ministers on his weekly TV program. He has no time for the

 

   

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mediocre leaders of the party he created [The Movement of the Fifth Republic (MVR)]. Fear and adulation surround ‘I the Supremo’” (cited in Gall 2006).

Weyland concurs stating that MVR is a loose movement with an eclectic

Bolivarian ideology which mixes nationalism, militarism, anti-imperialism, autocracy,

plebiscitarian and leftist marxist ideas, and is governed “not by institutional rules, but

by the personal dominance of a charismatic caudillo. Like other populists, Chávez

disdains any party institutionalization that might constrain his personal authority”

(Weyland 2001, 84).

 

 

   

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Conclusion In the Introduction, I raised the question of whether oil wealth harms democratization

equally across authoritarian regimes. Having examined this question in a large dataset

covering the 1950-2010 period, I have found support for one exceptional pattern: oil has

an unequivocally harmful effect on the probability of a democratic transition in

personalist autocracies. While about 20 personalist regimes without oil wealth (such as

Bangladesh in 1990, Benin in 1990 and the Philippines in 1986) made transitions to

democracy, none of the personalist regimes with significant oil wealth experienced a

democratic transition.

This difference for democratization prospects is not observed in other types of

authoritarian rule. So if you take two party-based regimes, with oil and without oil,

there will be no difference, statistically speaking, in their chances to democratize. The

same is true for military and other types of autocracy. The negative effects of oil on

democratization disappear in the non-personalist subset once the data is split into

personalist and non-personalist regimes. These effects are significant only for the

personalist subset of autocratic regime types. These findings suggest that there must be

something special about personalism. Using the cases of Azerbaijan, Cameroon and

Venezuela, I demonstrate that oil and personalism are closely related and that in all

three cases oil fueled personalism through similar causal mechanisms. By reinforcing

personalist tendencies and stimulating the processes of personalization of power, oil

made transitions to democracy extremely difficult in Azerbaijan and Cameroon and has

complicated the return to democracy in post-Chávez Venezuela.

The distinct nature of personalism has been highlighted in the literature on

regime transitions. Recent studies have examined how differences in authoritarian rule

influence important political outcomes. Yet, the relevance of personalism for the

“political resource curse” has not been sufficiently recognized. Instead recent studies

have focused on the role of hegemonic parties as the key institutional conduit for oil’s

authoritarianism-enhancing effects. While in some cases, the authoritarian parties were

the key mechanisms and oil contributed to the endurance of party-based regimes, oil

does not seem to have prevented democratic transitions in this type of authoritarianism.

After all, party-based regimes in Mexico and Indonesia, to take the most prominent

examples from the developing world, did democratize, as did the military regimes in

 

   

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Bolivia, Argentina and Ecuador. While recent studies have tried to explain this Latin

American anomaly by focusing on private inequality (Dunning 2008) and many would

argue that the strength of institutions (Robinson et al. 2006) or perhaps ownership of the

oil sector (Jones Luong and Weinthal 2010) mediate the effect of oil rents, I argue that

the type of authoritarian institutional structure is the key variable that makes a

difference. If personalist regimes are particularly severely affected by the curse of oil

wealth, then it is perhaps unsurprising that “crude democracies” are more likely to be

found in Latin America, than in the Middle East, Sub-Saharan Africa or post-Soviet

Central Asia, the three regions most commonly associated with the notion of personalist

and neopatrimonial rule, which might be related to the relatively late state-building in

these regions (Beissinger and Young 2002; Leftwich 2014).

Moreover, if oil is a curse for personalist (neopatrimonial) regimes, and not

other types of authoritarian rule, then the incentives and structures of this type of rule

must be more receptive to the effects of a resource curse. The case studies presented in

this study suggest that in societies as diverse as Azerbaijan, Cameroon and Venezuela,

oil fueled and supported their rulers’ drive to concentrate power in their hands, to

remove the checks and balances, to govern through informal patronage networks, and to

subordinate autonomous institutions to their whims. From all three cases, it is evident

that oil promoted personalistic or even sultanistic tendencies. Consequences of these

oil-fueled personalist tendencies for the prospects of democratization were enormously

damaging in all three cases.

Finally, my study demonstrates the usefulness of combining different research

strands in analyzing complex political phenomena. Literature on the oil curse and

research on comparative institutional authoritarianism have separately generated useful

insights but more integrative perspectives have been rare. The “new institutionalism of

authoritarianism” programme (Schedler 2009; 2013) is particularly promising. Other

scholars have emphasized the role of non-electoral political institutions more

traditionally associated with classic forms of nondemocratic rule, such as hegemonic

parties (Smith 2005; Brownlee 2007; Gandhi 2008; Magaloni 2008), the military (Bellin

2004), the royal court (Herb 1999), and patronage networks (Bratton and van de Walle

1997; Arriola 2009). The resource curse literature should pay more attention to the

differences in institutional-structural characteristics of authoritarian regimes. My study

 

   

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also suggests that the causal channels underlying the effects of oil on the political

regime and regime outcomes (authoritarian durability and democratic transitions) may

not be uniform across regime types. This claim needs further investigation.

Finally, while the case of Venezuela under Chávez may be considered unique, it

illustrates how oil wealth contributed to the personalization of power in a failing

democracy. Since Venezuela is not the only case of a democracy with lots of oil, further

studies can examine whether oil had a similar effect on regime dynamics in other

democracies.

   

 

 

   

197

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