Democratic snake-oil

by Henry on April 1, 2004

The newest political scientist in the blogosphere, Daniel Geffen, brings up an important reason why Iraq is unlikely to become a democratic exemplar for the Middle East. Oil. Heavy oil exporters have a miserable democratic record, with the sole exception of Norway. There’s little reason to expect that Iraq will be any different.

Geffen refers to a recent New Republic article, which seems to be all about the difficulty of introducing democratic reforms in existing authoritarian regimes – as he says, this is a poor analogy for the current situation in Iraq. Still, there’s not much room for optimism. Terry Karl, whose book, The Paradox of Plenty is one of the classic treatments of the problem, talks about how oil-producing states are bedevilled by

an exceptionally close linkage between economic and political power, developing networks of complicity based on the classic exchange between the right to rule and the right to make money.

These problems are likely to be even worse when petroleum exploitation coincides with state-building. The state has a strong incentive to use petrodollars to buy off potentially troublesome social actors, creating unhealthy mutual dependencies and Olsonian economic and political stagnation. Institutions tend to be weak and poorly enforced: the state doesn’t need to make itself accountable to its citizens, because it doesn’t rely on them for its revenues.

From this perspective, the outlook for Iraqi democracy is very poor indeed. The provisional authority has taken some useful steps – the creation of an “Oil Trust Fund” will help counter the political problems of too much oil-money sloshing around in the economy. However, the administration doesn’t seem to have much interest in creating the kinds of effective, transparent institutions that might sustain democracy in the longer term. As Gayle Smith at the Center for American Progress says,

Very few countries have been able to manage excessive resource wealth successfully, and most have instead fallen victim to governance without transparency, rampant corruption, and significant income disparities. The United States has an opportunity to avoid this same problem in Iraq. But the administration is doing just the opposite – relying on oil revenues to fund both reconstruction costs and the operations of the Iraqi government instead of reforming the sector. Meanwhile, the U.S. approach to the Iraqi oil sector is clouded by the same lack of transparency that characterizes its reconstruction plan and budget, contracting operations, and overhaul of the Iraqi legal system.

Ahmed Chalabi, a kleptocrat-in-waiting if ever there was one, is already busy creating the kinds of corrupt linkages between business and politicians that have been the bane of oil producing states in other parts of the world. It doesn’t bode well for the future. Nor does the provisional authority’s decision to introduce a flat tax at the behest of the ideologues at home. This is likely further to increase the Iraqi state’s dependence on oil revenues rather than taxes (which tend, as noted, to go along with a greater level of state accountability). On current form, it’s hard to imagine Iraq becoming a successful and attractive democracy, even if you forget about the continuing violence. Domino theorists shouldn’t hold their breaths.

{ 19 comments }

1

Sebastian Holsclaw 04.01.04 at 10:53 pm

Probably the best solution would be to deny government access to oil profits by putting them in a trust and distributing them directly (and without tax) to all citizens of Iraq.

2

Tom 04.01.04 at 11:20 pm

Venezuela’s had democratically elected government since 1958.

Shitty, corrupt, democratic government with periodic coup attempts (including two attempts by Chavez), but democratic government nevertheless.

(Not sure if this proves or disproves your thesis.)

3

Tom 04.01.04 at 11:21 pm

Venezuela’s had democratically elected government since 1958.

Shitty, corrupt, democratic government with periodic coup attempts (including two attempts by Chavez), but democratic government nevertheless.

(Not sure if this proves or disproves your thesis.)

4

Shaun Evans 04.02.04 at 12:19 am

“There’s little reason to expect that Iraq will be any different.” Well, there is the fact that US, British, Australian and other countries defeated the fascist governments of Germany and Japan, and successfully oversaw a transition to parliamentary democracy in both countries. The US, British, Australian and other countries defeated the fascist government of Saddam Hussein, and are now trying to help the Iraqis assume a parliamentary democracy. In my estimate, a past history of success counts as a big reason.

5

Shaun Evans 04.02.04 at 12:20 am

“There’s little reason to expect that Iraq will be any different.” Well, there is the fact that US, British, Australian and other countries defeated the fascist governments of Germany and Japan, and successfully oversaw a transition to parliamentary democracy in both countries. The US, British, Australian and other countries defeated the fascist government of Saddam Hussein, and are now trying to help the Iraqis assume a parliamentary democracy. In my estimate, a past history of success counts as a big reason.

6

John Isbell 04.02.04 at 12:20 am

IIRC at least one of those “by Chavez”s should read “on Chavez.” That was the one we endorsed the next day, before the putsch crowd had to flee. Don’t know about the other one.

7

Rajeev Advani 04.02.04 at 12:46 am

I like Daniel Geffen’s site, thanks for pointing that out. He seems to be a very reasonable fellow.

However, Henry, your cynicism in this post is very forcefully put considering that — to my knowledge — there are no solid events with which to compare the Iraqi reconstruction. Never before has a powerful first world country put this much weight into creating democracy in an oil rich region like Iraq. (If I’m wrong, please correct me).

You wrote: the state doesn’t need to make itself accountable to its citizens, because it doesn’t rely on them for its revenues.

The state certainly must make itself accountable to its citizens in this case. The US simply cannot allow Saddam-like neglect of the Iraqi citizenry lest the country certainly devolve into civil war. And I don’t think it’s a stretch to say that Bremer and Co. take this point seriously. When the immediate crises are resolved, and when oil production fully recovers (soon, now), surely more attention will be paid to reforming the sector.

You concluded: On current form, it’s hard to imagine Iraq becoming a successful and attractive democracy, even if you forget about the continuing violence. Domino theorists shouldn’t hold their breaths.

“On current form” has everything to do with the continuing violence. As soon as that violence subsides I think it’s much more likely that we’ll see some worthy reforms. So I’ll continue holding my breath, for perhaps another year.

8

Henry 04.02.04 at 2:11 am

Tom – you’re quite right (and Karl’s book has a lot about Venezuala – she’s originally a South Americanist). I should have been clearer in my post – I’d not at all be surprised if Iraq becomes a botched democracy like Venezuala, but I don’t see how this would contribute to the presumed aim of the Iraq invasion – creating a model democracy as a means to transforming the region.

Rajeev – there’s no case precisely like Iraq, but the factors that I point to are quite clearly of direct relevance, so I think I’m on pretty solid ground in making the argument as strongly as I make it. Your counter-argument, as I understand it, is that the US (a) is powerful enough, and (b) has the desire and resolve to turn Iraq into a successful democracy. The evidence to date doesn’t bear you out. Certainly – as I say in my post – the creation of the Oil Trust Fund demonstrates some awareness of the problem on the part of the governing authority. But for God’s sake, if they were serious about creating a viable, healthy democracy, they wouldn’t still be relying on thugs and plutocrats like Chalabi and his buddies, and providing them with the resources and clout to play a major role in post-transition Iraq. Or do you believe that an Iraqi government in which Chalabi and his friends play an important role is likely to be anything other than a corrupt kleptocracy, perhaps with a thin veneer of democratic process? The current US administration went into Iraq without much in the way of a plan for the post-war period (or, to be more precise, they decided to dump any planning process that might point up problems with their starry-eyed prognoses). They don’t seem to have taken the difficulties of creating democracy at all seriously. What makes you think that they’ll stick with it now, rather than retreating as quickly as is politic from the mess?

9

Jake McGuire 04.02.04 at 4:02 am

But the administration is doing just the opposite – relying on oil revenues to fund both reconstruction costs and the operations of the Iraqi government instead of reforming the sector

Heny, I realize that you didn’t write this, but do you have any idea what she meant by “reforming the sector”? It sounds nice in theory, but it’s in no way apparent what concrete steps can be taken. Norway is the only reasonably-well-functioning oil exporter out there, and they had a sound democratic government *before* they found oil, and even so they’re having economic issues because of it.

All of which sort of comes back to a common complaint that I have with these Bush-is-screwing-up-Iraq stories, namely: now that we’ve identified the problem, how are we going to do better? Absent concrete ideas and the stated intent to implement them, I have to believe that putting any combination of Kerry and/or the UN in charge is only going to lead to them saying “The Bush administration screwed everything up, so we can’t be held responsible for the implosion actually happening on our watch” and cutting and running.

Which is fine if one’s goal is to get Bush out of power, but not that useful if one’s goal is to get Iraq into some sort of functioning state.

10

Vinteuil 04.02.04 at 4:15 am

Henry:

You doubt whether the Bush administration will “stick with it.” You seem to mean this as a criticism.

Just for the record, do you think they *should* stick with it? Will you support them if they do? Or do you think that they would be wiser to cut and run, as the incoming Spanish administration (which has attracted so much sympathy here at CT) threatens to do?

Really, I think that serious people on the Left ought to consider the likely consequences of American failure in Iraq and ask themselves whether it’s worth it, just so that they can enjoy a bit of *Schadenfreude*.

The alternative would be to spend their time coming up with constructive suggestions about how one might make things better in Iraq, rather than worse.

11

dsquared 04.02.04 at 8:52 am

Y’know I’d always thought of Daniel Geffen as the man who signed Guns ‘n’ Roses and now I find out he’s also a political scientist.

12

Andrew Boucher 04.02.04 at 10:41 am

Mexico exports oil.

Dubious argument.

13

Rich 04.02.04 at 2:13 pm

Does Scotland count as an “oil exporter”?

14

Abiola Lapite 04.02.04 at 2:59 pm

“Mexico exports oil.”

Yes, and look what a paragon of honest and efficient government that country has been …

15

Dave Duchene 04.02.04 at 3:31 pm

For that matter, Canada is also an oil and natural gas exporter. Last time I checked, we were reasonably democratic. Of course, we were so before such exports started, so perhaps that’s peripheral to your argument.

16

Daniel Geffen 04.02.04 at 4:30 pm

True, Mexico and Canada both have significant oil reserves. And even the US was at one time an oil exporter. Before you dismiss my claims, note that my original post suggested that big problems start when the natural resource is in a region with separatist activity. And this link (http://www.nationmaster.com/graph-T/ene_oil_exp_net_gdp) shows just how insignificant Canada’s and Mexico’s oil exports are as a percentage of GDP.

Also, while it was actually David Geffen who usually gets credit for discovering Guns n’Roses, as I’m sure you know, I strongly believe that I should get a piece of the royalties.

17

Keven Lofty 04.02.04 at 6:54 pm

Fareed Zakaria in his book “The Future of Freedom” talks about this problem. His take is that functional democracies only work when a country reaches a certain economic tipping point. At this point in order to increase economic well being the middle classes need more freedom and power. They achieve this by pushing for democratic reforms (within a constitutional framework). In countries rich through oil (or any other extractive industry) that tipping point is passed without the need for help from a powerful merchant/professional class. Countries such as Canada, Norway and the UK, had already got functioning democracies before discovering large oil reserves.

18

Robin Green 04.02.04 at 9:39 pm

On the other hand, the traditional crude theory (no pun intended) is that the US/UK supported undemocratic and lesser-democratic (e.g. Iran) regimes in the Middle East because they were easier to control.

So the question I have is, with different US/UK foreign policies, could things have been any different? Could the land that now forms Saudi Arabia have developed into something more free than it is now, if our governments had acted differently?

I don’t know, I’m just asking.

19

Matt Weiner 04.02.04 at 9:48 pm

I don’t think “The incumbent’s policies were so ill conceived that there’s nothing his challenger can do to fix the resulting mess” is a good argument for re-election. Someone who screws up once is likely to do so again.

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