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Tamerlane-Chapter8 - Chapter 8 The Rise of the Post-Soviet...

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159 Chapter 8 The Rise of the Post-Soviet Petro-States: Energy Exports and Domestic Governance in Turkmenistan and Kazakhstan Theresa Sabonis-Helf T he future prospects for Kazakhstan and Turkmenistan are pre- sumed to be better than the prospects for most post-Soviet states, since they are fortunate to have two of the most desirable commod- ities in the world: oil and gas. Oil is the most important internationally traded commodity—both in terms of value and volume. It would seem to follow, then, that possessing oil offers hope to a state that it also will have wealth and power. Hydrocarbons have indeed captured the lion’s share of foreign and domestic investment in Turkmenistan and Kazakhstan, and both investment—and the returns that will follow—are expected to increase in the coming years. But even as Turkmenistan and Kazakhstan are beginning to enjoy signs of success in the international oil arena, their domestic economies and political structures are already beginning to show some of the classic negative side effects of becoming “petro-states,” nations which are defined and to an increasing extent structured by their role as oil/gas exporters. In spite of the perception that oil is a source of wealth for nations and can be an engine for development, the actual history of political and economic development in petro-states has not been one of success. In the words of one analyst, OPEC “is never far from disaster . . . partly because it’s a cartel of mostly undemocratic, mostly impoverished nations that can balance their budgets only if oil prices stay above $25 a barrel.” 1 In spite of the original goal of the OPEC states to “sow the oil wealth” and encourage
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160 SABONIS-HELF development that would last after their oil monies ran out, OPEC mem- bers on the whole now suffer double-digit inflation, cost overruns on vast public projects, insolvent banking sectors, and a collapse of agricultural and manufacturing sectors in those states that have them. 2 Most experts in the political economy of energy agree that being an oil exporting state is associated with certain pathological development tendencies, including lack of transparency, lack of separation of powers within the government, a conspicuous lack of equitable distribution of wealth and power, high levels of state debt, and a “permanent tendency toward rent seeking by state officials.” 3 Kazakhstan and Turkmenistan both already exhibit some “petro- state” tendencies. Are the classic political and economic instabilities of petro-states unavoidable? What are the larger global security ramifications if Turkmenistan and Kazakhstan continue to fail locally, while succeed- ing—or at least capturing market share—in global energy markets? This chapter begins with an overview of the classic problems of the petro-state.
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