Resource Boom and Social Policy in Authoritarian Regimes

Heiko Pleines und Andreas Heinrich in The Political Economy of Extractivism:

"The concept of the ‘rentier state’ assumes that governments in countries exporting natural resources can use the resulting rents to ‘buy’ the support of the populace by promoting generous state projects, establishing patronage networks, and waiving taxes. Following this logic, governments could also use natural resource revenues to fund an expansive social policy in order to gain popular support. However, the ample literature on the rentier state has largely neglected the aspect of social policy. In order to analyze the link between resource booms and social policy, this chapter presents an exploratory case study of Russia. In the 2000s, Russia experienced an oil boom. Russia was a country in which the population expected the state to provide comprehensive welfare and in which the authoritarian regime was ‘soft’ enough to make the expectations of the population relevant for regime survival. Revenues of the national state budget rose threefold between 1999 and 2008. This gave the country the financial resources for an expansionary social policy. In parallel, Vladimir Putin, who was elected Russian president in 2000, swiftly consolidated power using increasingly authoritarian means. The sharp decline of oil prices in 2008 and again (and more durably) in 2014 provides the opportunity to analyze the impact of dramatic budget shortfalls on social policy. Thus, the Russian case study covers two phases: from 2000 to 2008 (boom) and from 2009 to 2019 (contraction and stagnation). The case study covers, first, the economic situation, namely, the impact of the resource boom on socioeconomic development and state revenues; second, the state’s social policy and its framing by the government during the boom and contraction phases; and, finally, public expectations around social policy and the perception of actual policies. The results stand in stark contrast to the assumption that a rational authoritarian leadership uses natural resource revenues to ensure regime stability via transfer payments to groups critical for regime survival. Instead, social policymaking is more complex in Russia; it had to incorporate different ideas, whereby neoliberal technocrats primarily focusing on financial austerity and the avoidance of ‘Dutch disease’ symptoms dominated the boom period for several years. Moreover, there has been a policy focus on the development of ‘human capital.’ At the same time, reactions to public discontent with the actual social policies have generally been limited to ad hoc measures."

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