Rent being discussed this much also brings the concept of rentier. Thus, we can say that one who gets a rent due to a certain advantage of its own can be defined as a rentier.

If we go on with our analysis, politics and economics are two concepts that cannot be thought separately from each other. As economics can define the political structure of a society, the opposite of this proposition can be true. For instance, welfare state is a political choice, but it cannot be a sustainable policy without the certain tools of the economy.

States can be classified according to several variables and factors by different disciplines. Democratic, authoritarian, liberal, communist and totalitarian are some of these concepts. Rentier state can be taken as another form of this definition. It was suggested by Hossein Mahdavy for describing Shah Regime in Iran[2] and then this concept has been used mainly by the scholars of the Middle East Studies and political economy. Mainly the countries that have rich hydrocarbon resources or minerals are in the interest of this debate.

Hazem Beblawi[3] tries to make a clear definition of the concept of rentier state by suggesting several characteristics,

1. He claims that in general sense, there are certain levels of rent for every economy. However, a rentier state is the one, “where rent situation predominates”.
2. He divides rent into two as internal rent and external rent. Then, he says that to define a state (or economy) as rentier, the externality of the rent is important. In a way his explanation is fair. Externality of rent would have different repercussions than internality. If the rent is external, state economy is dependent on the resources coming from outside.
3. Third one is one of the main characteristics of a rentier economy and closely related with the second one. While a small group of people in the society generating the rent, the majority involved in distribution and utilization of it. If we try to analyze this with the second one, it can be said that if there is an internal rent there should be another sector which pays for the rent in the economy. This means the economy has succeeded to develop other sectors and it is not dependent to the money coming from one source. However, when we think about an economy based on oil revenues, employed people in this sector only represents a small scale of the society. The revenue is provided from outside as the producer sells oil to the buyers. Then, it is different from an economy again that relies on the revenues coming from one sector. For instance, an agrarian country that relies on the revenue that comes from the exports of agriculture sector cannot be defined as rentier, due to high rate of people got involved generating of this revenue.
4. Lastly, the rent should be obtained by the government to call it as the rentier economy. This makes government to act independently and lose the basis of the necessities of a democracy.

Giacomo Luciani explains the situation in a simple way. He claims that when the rent is earned from external resources by the government, this makes it unnecessary to collect taxes from its citizens to be able to run the state. The society would be glad or even might be enjoying from the benefits of the situation directly due to social expenditures of the government. However, this is a dilemma that prevents state to be accountable against the society on the implemented policies. Thus, all these push us to ask the question of “Are rich oil or mineral resources a curse for a country?”

Richness or Curse?

As mentioned before, countries with rich oil and mineral reserves tend to show the symptoms of the rentier economy. However, not every country that has rich mineral resources can be called as rentier. The historical, cultural, geographic location and economic patterns of the state are the other indicators that play role in this context.

Arab states and Norway or the US represents contradictory examples in this sense. Thus, I believe it is too harsh to call such an advantage as a curse in the first hand.

For a country that succeeded to establish its institutions and diversified the sectors in the economy, discovery of oil resources and minerals can even be called as a fortune. In the case of the US and Norway, this sector not only helps to consolidate the economy, but also decrease the dependency factor in energy. However, in other examples, these revenues can be the reason that prevents the development of economy or the social structure.

Making Comparisons and Using Rentier State as an instrument

Apart from the discussion above, in the literature it is claimed that rentier states are tend to be authoritarian. It is hard to say that this argument has no basis. In fact, it is an instrument used to explain the situation in the Post Soviet geography.  

In this case, I would like to state that a theory is a tool that helps to clarify the blurred picture or in a way helps to understand a complicated situation easily or better.  May be the concept of rentier state seems to explain several points in the Eurasian region, especially for the countries that have rich oil and gas reserves. However, it would be purely an analogy to describe the situation as above. It is true that similar symptoms can be observed, but no one can guarantee that reasons and results overlap in both with Post Soviet Republics and Arab Countries.

In this context, it can be said that transitionalists did the same mistake, while trying to compare and draw a framework for the democratization process of Post Soviet states after the demise of the USSR with Latin America experience.  There are several true assumptions that are consistent, but the first theoretical basis was just like a suit that was tailored for Latin America, but also can be borrowed by its counterpart for the period of recognizing the region. Not only Soviet legacy, but also ethnic structure of the region as well as previously mentioned factors make these two cases different in spite of similarities.

Making comparisons and taking lessons from the past is important. So, I believe that trying to understand the current situation in world politics and using previous experiences are really important. However, concepts and theories can be diversified according to peculiarities of each region or country according to its legacies. It is for sure, oil or natural gas reserves would be effective on state and nation building of Post Soviet Republics. However, in the last analysis this would not be the sole factor that matters while reading the political and economic transformation of the region.

Hasan Selim Ozertem

10 April 2008

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