June 10, 2008
The events of Sunday and Monday have placed both the United States’ two biggest bugaboos — Venezuelan President Hugo Chavez and Iranian President Mahmoud Ahmadinejad — in quite a bind.
In the face of rancorous opposition at home and abroad, Chavez was forced to abandon an intelligence law that would have obliged Venezuelans to snitch on each other. Also under extreme pressure, Chavez publicly withdrew his support for the Revolutionary Armed Forces of Colombia (FARC), calling for the Colombian rebel group to put down its weapons and surrender all its hostages — and this after Colombian forces captured several pieces of FARC computer hardware indicating the group’s deep links to the Venezuelan state, not to mention to Chavez personally. Only Monday, a Venezuelan national guard officer under arrest admitted in a Colombian court to smuggling weapons to the FARC.
In Iran, meanwhile, Ahmadinejad received both barrels from a host of Iranian opinion leaders — including leading religious figures — Monday as Iran’s central bank announced that inflation now tops 25 percent. Criticism targeting Ahmadinejad’s handling of foreign affairs also has ripened recently; many in Iran now blame the president’s belligerence for holding up Iran’s efforts to get a say in Iraq, for allowing the United States to outmaneuver Iran and for limiting Iran’s long-term options.
In each case, the coalitions of forces that brought the two leaders to power seem to be fracturing. Chavez’s latest move, and the Colombia-related revelations, robbed him of his ideological sword and shield. Ahmadinejad, elected on a populist economic platform, has instead led the Iranian economy in a slow-motion collapse. And both now face a political slide into oblivion during a period of high oil prices.
Most intriguing about the recent events is not that the two leaders screwed up, because really they didn’t. Colombia is richer and more powerful than Venezuela by any measure, meaning any leader in Caracas would be crazy not to seize opportunities to keep Colombia off balance. For its part, Iran has a vested interest in the future of Iraq (if for no other reason than Mesopotamia’s nasty habit of invading Persia), and one of the few ways to get a stake in that future is to capture and hold Washington’s attention.
Much more fundamental matters are at stake here.
Iran and Venezuela are oil states. Oil states fall into two categories. First, there are those that developed economically first and then found oil, such as Canada, Norway and Australia. For these states, oil is merely a supplementary source of income with little impact on the broader economy. For the second group, on the other hand, oil is a primary economic activity; examples that come to mind include Nigeria, Angola and Kazakhstan. The easy money that comes from oil distorts this type of nation’s economy, diverting income to corruption and to reinforce its oil industry while other economic sectors tend to languish. After all, why take the decades necessary to develop an automotive industry when one can just buy cars?
The division isn’t perfect — Malaysia and Mexico are doing their best to develop economically despite being resource-rich, while Russia seems to be slipping from an industrial economy to a resource-based one. But there is no doubt that Venezuela and Iran fall into the latter category of nation.
Developing oil states have a tendency to be rich but weak and unstable. Oil wealth comes and goes as oil prices rise and fall, and its sheer volume combined with its lack of predictability make true economic development extraordinarily difficult. The geography of these countries tends to push them into having aggressive foreign policies, while their economies make their strength cyclical. It is not that Chavez and Ahmadinejad have made any particularly bad choices, but Venezuela’s and Iran’s economic geography means their respective margin of error is both small and variable — that is, unless these states can find another means of stabilizing their systems.
Saudi Arabia — the quintessential oil state — has done just this by leasing itself out to the global superpower and by stuffing roughly a trillion dollars away in savings for rainy days. Russia has done so by balancing its oil dependence with the inheritance of a superpower’s empire.
But bereft of some sort of a buffer, the leaders of Venezuela and Iran are bound to stumble from time to time — and perhaps take their countries with them.