Hard Times in the Lands of Plenty

Hard Times in the Lands of Plenty: Oil Politics in Iran and Indonesia

Benjamin Smith
Copyright Date: 2007
Edition: 1
Published by: Cornell University Press
Pages: 256
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  • Book Info
    Hard Times in the Lands of Plenty
    Book Description:

    That natural resources can be a curse as well as a blessing is almost a truism in political analysis. In many late-developing countries, the "resource curse" theory predicts, the exploitation of valuable resources will not result in stable, prosperous states but rather in their opposite. Petroleum deposits, for example, may generate so much income that rulers will have little need to establish efficient, tax-extracting bureaucracies, leading to shallow, poorly functioning administrations that remain at the mercy of the world market for oil. Alternatively, resources may be geographically concentrated, thereby intensifying regional, ethnic, or other divisive tensions.

    In Hard Times in the Land of Plenty, Benjamin Smith deciphers the paradox of the resource curse and questions its inevitability through an innovative comparison of the experiences of Iran and Indonesia. These two populous, oil-rich countries saw profoundly different changes in their fortunes in the period 1960-1980. Focusing on the roles of state actors and organized opposition in using oil revenues, Smith finds that the effects of oil wealth on politics and on regime durability vary according to the circumstances under which oil exports became a major part of a country's economy. The presence of natural resources is, he argues, a political opportunity rather than simply a structural variable.

    Drawing on extensive primary research in Iran and Indonesia and quantitative research on nineteen other oil-rich developing countries, Smith challenges us to reconsider resource wealth in late-developing countries, not as a simple curse or blessing, but instead as a tremendously flexible source of both political resources and potential complications.

    eISBN: 978-0-8014-6186-6
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgments
    (pp. vii-xii)
  4. Introduction
    (pp. 1-14)

    This book is concerned with the politics of oil wealth and how it shapes the abilities of rulers in oil-rich countries to deal with social dissent. Autocrats in some oil-rich countries managed to ride out the political crises brought on by the 1973–74 and 1979 booms and 1986 bust, while others were not so lucky. Despite the extensive literature on oil wealth and politics, we still lack a general explanation for why some oil-rich regimes survive boom- or bust-generated political shocks while others collapse, upending their domestic stability, oil exports, and sometimes the international political economy. In the following...

  5. CHAPTER 1 Oil Wealth and Politics in the Developing World: Theories and Evidence
    (pp. 15-41)

    The global oil market and its associated booms and busts have generated a large literature in political science. One contention in this literature is that political instability is a near-certain long-term outcome of oil wealth. Another line of argument maintains just the opposite, that oil makes authoritarian regimes stronger by funding patronage and repressive apparatuses. In this chapter, I conduct the first cross-national tests of these arguments and investigate the effects of oil wealth and the oil booms and bust on political stability. Drawing on data from 107 developing countries between 1960 and 1999, I estimate the effects of oil...

  6. CHAPTER 2 Explaining Regime Durability in Oil-Rich States: Oil, Opposition, and Late Development
    (pp. 42-77)

    The oil booms of the 1970s dramatically increased the revenues available to state leaders in exporting countries (see figure 2.1). The quintupling of oil prices led to a radical shift in capital flows from developed to exporting nations and gave rulers in oil states huge discretionary budgets. Governments in these states injected the windfall revenues into their domestic economies in very similar and problematic ways, and in a short period much of the exporting world saw specific effects related to inflation, the booming oil sector, and exchange rate effects occurred in much of the exporting world in a short period...

  7. CHAPTER 3 The Impact and Legacies of Oil and Late Development: Coalitions and State Building before the Boom
    (pp. 78-120)

    In chapter 2 we discussed the political and economic crises that Iran and Indonesia shared and that made state-led development the likely economic strategy. This chapter explains the extraordinary differences between the two states that emerged from the genesis of this common strategy. That variation, I argue, resulted from the timing of late development. To reiterate, the key timing factors are when each regime confronted its opposition and when it gained access to substantial oil revenues in relation to its initiation of late development projects. To illustrate the causal importance of timing, I first present the period in which these...

  8. CHAPTER 4 The Oil Booms and Beyond: Two Exporting States Confront Crisis
    (pp. 121-167)

    In October 1973, American support to Israel during the Yom Kippur War provoked the Arab nations of the Organization of Petroleum Exporting Countries (OPEC) to collaborate in quintupling the price of oil. Iran and Indonesia, like many other developing countries, experienced massive revenue windfalls in late 1973, in a single year almost quadrupling the discretionary revenues available to state leaders. And these revenue windfalls were almost entirely discretionary: as one scholar notes, the differences between exporters in the developing world were overshadowed in influence by the centrality of the state in ʺownership, acquisition, and disposition of oil revenuesʺ (Amuzegar 1999,...

  9. CHAPTER 5 Oil, Opposition, and Late Development: Regime Breakdown and Persistence in Twenty-One Oil-Exporting States
    (pp. 168-191)

    The introduction and the first two chapters of this book demonstrated the existence of, and suggested an answer to, a contradiction between what we thought we knew about the politics of oil wealth and the robust trends that emerged when those ʺstylized factsʺ were subjected to empirical scrutiny. Oil wealth generally was held to have a negative influence on regime durability. A central conclusion of this book, however, is that this is only the case in some circumstances. In other cases, the opposite is true, and oil wealth facilitates both state building and robust coalitions. In the third and fourth...

  10. Conclusion
    (pp. 192-204)

    This book began with three puzzles: Why did the Shah of Iran fail to maintain power through the political crisis of 1977–79 while President Suharto of Indonesia, facing a similar challenge, rode out the crisis and stayed in power for twenty more years? Why does oil wealth coexist with weak states in some developing countries and strong ones in others? And why have social scientists not found a way to explain the multiple effects that resource wealth can have on domestic politics? In chapter 2, I suggested an answer to the third of these questions by way of answers...

  11. Appendix
    (pp. 205-206)
  12. Bibliography
    (pp. 207-240)
  13. Index
    (pp. 241-244)