How oil autocracies learn to stop worrying: Central Eurasia in 2008 global financial crisis

Abstract

Autocracies in developing countries are more likely to collapse during economic crises. Some influential works and popular media extend this argument to oil-rich autocracies, but crossnational empirical studies find little evidence to support this view. Yet, while the causes of their stability during boom periods are well understood, how oil-rich autocratic regimes remain stable during busts is underexplored. This article advances an explanation that refines and complements existing accounts. I argue that we need to take into account three interrelated factors that currently are likely to stabilize oil-rich autocracies: considerable savings, policy learning, and sustenance of coercive capacity. Leveraging evidence drawn from 40 original interviews, documents, news media, and academic literature, I investigate the role of these factors through a comparative case study of Azerbaijan, Kazakhstan, and Turkmenistan during the 2008 global economic turmoil. The findings highlight the ruling elites' ability to amass sizeable savings that later provide safety cushions, to update their know-how through drawing lessons within and beyond fiscal policy, and to sustain coercive capacity without resorting to overt repression. Through economic crises, they may learn to not escape the "resource curse," but to escape despite the "resource curse."Electronic copy available at: https://ssrn.com/abstract=3457767How Oil Autocracies Learn to Stop Worrying: Central Eurasia in 2008 Global Financial Crisis "Kogda zakonchitsya neft', nash prezident umret."("When the oil runs dry, our president will die.") From a satirical song by DDT, a popular Russian rock band INTRODUCTIONThis article explores sources of regime stability in oil-rich 1 autocracies during external economic crises by using a comparative case study of Azerbaijan, Kazakhstan, and Turkmenistan during 2008 global financial crisis (GFC). Conventional views argue that autocracies are likely to experience regime instability, breakdown or liberalization under the pressure from external economic shocks. Influential studies expect oil-rich autocracies to be particularly susceptible to such crises given the highly volatile nature of their main resources. From this perspective, Central Eurasia's oil-rich autocracies should have experienced serious instability in the aftermath of the GFC, akin to that confronted by comparable regimes in the Middle East and North Africa, such as Algeria, Bahrain, and Libya, which prior to the crisis exhibited many of the same economic, institutional, and cultural characteristics, such as cross-nationally similar petroleum rents, resource dependencies, autocratic governance, colonial past, and Islamic cultural legacy. Yet, they endured it unharmed. Furthermore, while these regimes had similar initial conditions but over time embarked on different trajectories that should have entailed varying levels of vulnerability, it is puzzling why, despite these differences, all three emerged from the crisis similarly intact.A serious reinvestigation into the sources ...

Trump’s “America first” energy policy, contingency and the reconfiguration of the global energy order

“…SWFs are state-owned investment funds that accumulate, among other assets, state revenues from mineral wealth. These reserve funds provide autocratic governments with a protection cushion shielding them against adverse oil price shocks in periods of oil price hikes (Ahmadov, 2019).…”

Renewable Energy Targets and Policies in Traditional Oil-Producing Countries: A Comparison of Azerbaijan and Kazakhstan

“…Azerbaijan is a traditional oil-producing country where the oil and gas industry dominates the economy and provides most of the country’s energy supply. Importantly, the oil and gas sector is the key pillar of the government’s export earnings and fiscal revenue (Ahmadov, 2019). As of 2019, Azerbaijan’s energy mix (total energy consumption) had the following distribution: natural gas (65%), oil (33%), and hydropower (2%) (Ritchie et al, 2020a) (See Table 3).…”