The Daily Planet #43: The Petrostate, Part 4

" Don't study OPEC," Juan Pablo Perez Alfonzo told me when I sought out the founder of the Organization of Petroleum Exporting Countries (OPEC) in his home in Caracas, Venezuela, during the height of the 1970s oil boom. " It is boring. Study what oil is doing to Venezuela, what oil is doing to KS."

So starts Terry Lynn Karl's "Paradox of Plenty." And we might ask that question too: what does being a petrostate do to a country? Two influences immediately come to mind:

The country's main revenue stream is oil revenue (at least 50% in Saudi Arabia, and 30-35% in Russia for example) rather than tax revenue, which means that the governing class is relatively insulated from their citizens. In fact, they have the money to buy off their citizens' loyalty. That makes for authoritarian politics.

There's much less incentive to diversify the economy - why do so when liquid gold is on tap? It's a comparative advantage of the Petrostate, after all. Hence the 'Paradox of Plenty.' In turn, that makes the Petrostate more vulnerable to oil prices.

and finally, there's the universal link between natural resource extraction and violence - wherever the economy is dependent on mining or oil or some other natural resource, you have both state and private interests enforcing that extraction. And that conflict is often independent of the ideological bent of the state - both right-wing and left-wing governments have gone after those protesting extraction. As today's link says:

But the increasing conflict between the Correa administration and social movements demonstrates a greater diversity among the continent’s leftist projects, at times dividing governments and movements with a shared history in the struggle against privatization and fiscal austerity.

The Correa government was seen as a radical left wing government, and yet it wasn't immune to violence (and now has added drug violence on top of oil violence).

Metabolism trumps ideology.

Beyond the Petrostate: Ecuador's Left Dilemma - Dissent Magazine

In Ecuador, to oppose resource extraction is to be an enemy of the state.