Where oil wealth rises, democracy declines

Freedom House has just released the country reports from the latest edition of its annual Freedom in the World survey, as well as Nations in Transit report – a comprehensive annual study of reform in the former Communist states of Europe and Eurasia.

According to the findings, the year 2007 was marked by a notable setback for global freedom and one of the regions where it was most pronounced is former Soviet Union. One of the key findings of the Nations in Transit report is that as oil and natural gas revenues surge in Russia and Central Asia, democratic institutions are more and more in trouble. The erosion of democratic governance has occurred not just in electoral practices, but also in the areas of civil society, independent media, and judicial independence.

The reason for that decline is growing reliance on natural resource exports. It erodes the institutions of democratic governance because massive inflows of export revenue go directly into the state’s coffers with little or no accountability and oversight. Not surprisingly, that generates corruption and cronyism undermining both democratic governance and free markets. Freedom House Director of Studies, Christopher Walker, comments:

    “The resource curse is taking root. The growing authoritarianism in oil and natural gas-rich countries such as Russia, Kazakhstan and Azerbaijan is severely restricting the ability of democratic institutions to operate.”

This negative correlation between petroleum wealth and democracy is certainly not new, with the oil-rich and non-democratic Middle East being the prime example. But rising prices of oil and gas on the global markets add to the problem and allow authoritarian rule to thrive – or tighten – where the governments are in a possession of sufficient natural wealth to rest their power upon it.

As oil and gas prices continue to climb, all three post-Soviet resource-rich countries mentioned earlier received a “downward trend” assessment of their political rights and civil liberties. This was also the case in Freedom House’s rating a year ago and unfortunately this year may not be the last one when such trends continue.

Published Date: July 02, 2008