Russia v. Venezuela: Whose Oil Promotes Democracy and Why?

Both Russia and Venezuela are rentier states; their economies rely on windfall profits from oil and gas. The majority of literature argues that for rentier states high oil profits tend to result in poor economic performance, unbalanced growth, weakly institutionalized states, and authoritarian regimes. Thad Dunning's Crude Diplomacy argues that some Latin American countries such as Venezuela have experienced an increase in democracy when crude prices rise. Dunning argues that the positive relationship has to do with a political bargain between the elite and society, particularly the role of minimal taxes on the elite in non-oil sectors and increased spending by the government on social programs. This paper applies Dunning's hypothesis to Russia and asks: What factors enable some resource abundant states to utilize their natural resources to promote democracy? Does Dunning's hypothesis work for Russia? I will consider the 2000s through the financial crisis of 2008, when Presidents Chavez of Venezuela and Vladimir Putin of Russia consolidated their power amid high oil profits. The first section of the paper reviews the debate in the rentier state literature. The second section places Dunning's work on Venezuela within this literature. The third section explores Russia's policies concerning taxes and social welfare spending. The paper concludes by comparing the experiences or Russia and Venezuela. [ABSTRACT FROM AUTHOR]