PONARS Eurasia members took a closer look at the periodically-floated theory that oil barrel prices correlate with reform measures in Russia over time. Their comments were sparked by a recent op-ed in the Washington Post by Anne Applebaum, "When oil prices rise, Russia has freedom over a barrel." According to a PONARS member, the basics of the theory are: “high oil prices = domestic stasis + aggressive foreign policy; low oil prices = domestic change + accommodating foreign policy.” In short, PONARS Eurasia members predominately refuted the notion, commenting as follows:
- If oil prices go down, the government is more vulnerable to some sort of economic/fiscal crisis. But of course, autocrats may respond to such crises either by making concessions to the opposition/opening to the West OR by increasing repression.
- The dependent variable is meaningless; liberalization, even under Gorbachev, is a totally different beast than it is under Putin; the stakes and consequences are just not remotely comparable.
- Oil prices went up from 1986 to 1989, as Gorbachev continued liberalization.
- Oil prices were near rock bottom when Putin launched Chechen War II.
- [The theory] means Russian political trends are not affected by the person in charge of the country; it means Gorbachev and Putin made no difference.
- Just choosing one independent variable without controlling for other factors invalidates the argument ab initio.
- Thomas Friedman had a piece in Foreign Policy over four years ago called the "First Law of Petropolitics" that made the same argument.
- If one accepted her [Applebaum] argument, it was Gorbachev who should have been taking a harder line and Putin who should have been liberalizing and refraining from the use of violence.
- Price pressures do not seem to track with claims regarding the heavy-handedness of the state. In brief, re-statization in the oil sector since '04 has hampered production, as the largest rates of growth have come from the dwindling private actors rather than from those directly owned or controlled by the state.
- If prices were governing behavior, we would expect that the government would have sought to encourage efficient private production/exports, not clamp down on the sector and put at risk the earning of valuable revenue.
- The problems he [Gorbachev] created had far more to do with the incoherence, flawed design, and poor implementation of his economic policies than with any trends in the price of oil.
- Applebaum gets the chronology wrong in this sentence: "But in 1999 (when oil prices rose to $16 a barrel), Yeltsin's prime minister, Vladimir Putin, launched the second Chechen war, the West bombed Belgrade, and the mood in Russia turned distinctly anti-Western once again." Getting the chronology right is important here.
- [Russian economist and politician Yegor] Gaidar wrote that there are two key external factors in the late 1980s that crashed the Russian budget, blew their credit rating, and effectively bankrupted them. One was the drop in oil prices in 1986 and the second factor was rising grain prices. Both of these factors were outside of Soviet control.
For questions and further comment by PONARS Eurasia members on this topic please contact Alexander Schmemann at [email protected].
