The Middle East’s paradox of plenty

Ihsan Isik

Today’s Zaman

The repressive regime of 30 years in Egypt surrendered to the 18-day-long resistance of the people. According to many political authorities, Egypt’s journey towards welfare and democracy could have started much earlier.

What prevented Egypt from joining the global winds of democratization in the 1980s was “the oil of diplomacy.” First, there was the competition between Moscow and Washington to win Egypt over through foreign assistance during the Cold War era, then the investments of oil-rich Gulf countries and Egyptians living abroad and finally Egypt’s discovery of its own natural gas and oil in the 1980s and 1990s put off the public’s resistance. When Egypt found oil and natural gas, the people thought it was a blessing gushing out from underground. But this wealth never turned into a blessing showering over them. To the contrary, the dark fossil fuel bursting from the ground became a calamity for the Egyptian people.

According to several scholarly studies, the richer countries get, the more democratic the administrations become. But there is one exception to this process. If national wealth relies primarily on natural resources such as oil, natural gas, diamonds, gold or copper, then democratization in that country either slows down or completely stops. Recent studies have found that resource-rich countries (compared to resource-poor countries) are not only more anti-democratic, but they are also backward in economic development and more prone to civil clashes. In political economy, the rich country-poor, suppressed people contradiction is called the “paradox of plenty,” “the resource curse” or “the Dutch disease.” The paradox of plenty is seen in countries that found oil before installing laws and democracy more so than in countries that found oil after establishing laws and democracy, such as Norway, Denmark, England and the US.

Inverse correlation between oil prices and democratization

The income per capita in oil-rich Organization of the Petroleum Exporting Countries (OPEC) members declined by 1.3 percent between 1965 and 1998, while the income per capita increased by 2.2 percent in poor countries, a scientific puzzle. Some recent studies found an inverse correlation between oil prices and democratization. According to Stanford University’s Larry Diamond, none of the 23 countries that derive most of their export earnings from oil and natural gas is a democracy. According to Freedom House, the worst year for freedom in the world since the end of the Cold War was 2007, the year when oil prices peaked. Freedom of speech, freedom of the press, free and fair elections, freedom to organize, the transparency of the government, the impartiality of the judiciary, the maintenance of laws and the establishment of independent political parties and nongovernmental organizations are hurt in oil-rich countries when oil prices rise. In contrast, when oil prices decline, signs of freedom substantially improve.

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