Why the Resource Curse Thesis Works Less Well for Post-Soviet Eurasia: The Russian Petrostate in Comparative-Historical Perspective

The evolution of the Russian hydrocarbons sector has seen many ups and downs. The downturns may well reflect some of the dynamics associated with the “resource curse” thesis – the thesis at states depending on fossil fuel rents for a substantial portion of their revenue will likely fail to develop other sectors of the economy while resisting reforms and becoming more vulnerable to external shocks. We argue that this thesis does not fit well with the experience of the post-Soviet Russian petrostate. If anything, Russia’s vast natural resources have been more often a “blessing” than a “curse” for the Russian economy, in part because the Russian petrostate has emerged from the distinctive historical context of Soviet development, in which oil and gas were initially designed to support a self-sufficient and diversified economy. While this did not prevent economic stagnation in the late Soviet period (1970s–80s) or a steep decline in production during the early post-Soviet transition (1992–99), it created the foundations for a petrostate that became more resilient and adaptable in the face of price volatility, new external shocks, and increasingly contentious relations with the West.

Following 2000, while the state played an increasingly assertive role in the oil and gas industry, the government also adopted various measures to limit dependence on resource rents and mitigate the negative effects of the “resource curse.” These included a Stabilization Fund, new budgetary practices to encourage counter-cyclical spending, diversification of supply flows and export composition, and intensified investment in new infrastructural projects. Moreover, within a broader comparative perspective, we find that Russia’s “developmental petrostate” is quite different from the petrostates of the Gulf and may in fact be closer to Norway key respects. There are, of course, growing concerns over carbon emissions and the technological demands of further exploration; and the green energy transition will eventually reduce global demand for fossil fuels. In the meantime, hydrocarbons have been mostly a positive force in the Russian economy, enabling it to survive (for better or for worse) amid multiple rounds of Western sanctions and more than three years of a costly war in Ukraine.

Rudra Sil is Professor of Political Science at the University of Pennsylvania, where he has been a faculty member since 1996 after receiving his Ph.D. from Berkeley. His interests span Russian & East European studies, comparative politics, international development, and qualitative methodology. He is the author, coauthor or coeditor of eight books, and has published more than three dozen papers, including in some of the leading journals of the discipline.