States dependent on resource revenues are subject to

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Unformatted text preview: y environment by weakening the global democratization trend (Ross, 2001). These dysfunctional energy politics could undermine fundamental Western and European foreign and security interests worldwide. 196 Oil DDW 2012 1 High oil revenues encourage unsustainable economies and weak states in Southwest Asia Maloney, Senior fellow at the Saban Center for Middle East Policy at the Brookings Institution, 08 Suzanne Maloney, Senior fellow at the Saban Center for Middle East Policy at the Brookings Institution, 12-5-08, [“The Gulf's Renewed Oil Wealth: Getting it Right This Time?,” Survival: Global Politics and Strategy, 50:6, 129-150,] E. Liu It would be tempting to view the latest avalanche of revenues and investment in the Middle East as an antidote to its manifold internal and external challenges. However, more than any other region of the world, the Middle East has long stood as a testament to the limitations of wealth in generating good governance and sustainable growth. Amidst the benefits of the current boom lies considerable reason to fear that the new global energy balance – in which demand is likely to maintain high prices for the near to medium term – will only exacerbate the region’s existing tendencies toward extremism, corruption, unrest and intra-state violence. Under such a scenario, the perverse consequence of the new oil boom could be a Middle East that is far wealthier but even more unstable than it is today, with disturbing implications for the rest of the world’s increasing reliance on Gulf oil and gas. The reason for this prospective paradox is the well-documented linkage between resource wealth, growth and autocracy. This is a function of the very mixed economic and political implications of resource wealth. Oil exploration and development is a highly capital-intensive industry that tends to create export enclaves without sufficient employment or related industrialisation to promote balanced or sustainable development. States dependent on resource revenues are subject to intense fiscal volatility and wage and balance-of-payments distortions, and resource wealth is associated with lower rates of economic growth and development.29 In the political realm, a disproportionate reliance on external rents distorts the political process by divorcing the state from any meaningful social accountability, reinforcing instruments of repression, giving rise to corruption, and eroding checks and balances. The state’s primary role vis-à-vis society becomes a distributive one, and the result is a corrosion of formal institutions and the reinforcement of patronage.30 Beyond the internal distortions, academic studies have demonstrated that oil-rich states tend to be \ more likely to engage in conflict, spending more on security and maintaining larger armies than non-oil-dependent countries.31 197 Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Low Prices Good – Stability 198 Oil DDW 2012 1 Oil prices causes border conflicts...
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