1 Research Problem
Oil and gas are economically and politically significant natural resources, which have been related to nationalism in Latin America and the Caribbean since the early twentieth century. Nationalism may resort to the nationalization of strategic sectors in various ways and degrees (Cf. Philip 1989). Bolivia, for instance once adopted a “patriotic nationalism” in 1937 with the expropriation of Standard Oil of New Jersey which was suspected of treason during the Chaco War, long before adopting a “populist nationalism” with the nationalization of Gulf Oil as a result of the social pressure, in 1969. Nationalism can also aim at different purposes, according to a government’s needs. In 1948 Venezuela’s Energy Minister, Juan Pablo Pérez Alfonso, invented a “third-world nationalism” against US and European big oil companies interests, through a fifty-fifty rent-sharing system for the State and private companies, which he would help replicate in 1960 with the other founding members of the OPEC (Iraq, Kuwait, Iran and Saudi Arabia). This “non-nationalizing nationalism” was substituted by the 1973 nationalization of carbon-fuel fossils, alike the Bolivian nationalism. Meanwhile, the Army had Ecuador join the OPEC and adopted a “modernist nationalism” inspired by the Brazilian military government, leading to nationalize Gulf Oil’s assets in 1973 before assigning a monopolistic control of the local market to the national oil corporation CEPE, and finally giving control of the CEPE-Texaco consortium to the Ecuadorian state, in 1976. The most recent trend of what has been coined “resource nationalism” refers to “the maximization of public revenues; the assertion of strategic state control (ability to set political or strategic direction to the development of the sector); and enhancement of developmental spillovers from extractive activity” (Haslam and Heidrich 2016b, 1). This trend can be identified as a policy paradigm shift reverting the neoliberal cycle launched during the 1980s, in the aftermath of the Latin American debt crisis.
The total population of Latin American oil and gas exporting countries includes Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Peru, Trinidad and Tobago and Venezuela. Among these, six countries have experienced resource nationalism at various degrees during the past two decades (namely Mexico, Brazil, Venezuela, Bolivia, Ecuador and Argentina) while the other three kept on implementing liberal policies (namely Colombia, Peru and Trinidad and Tobago). While most radical nationalism reached nationalization and expropriation—like in Bolivia, Venezuela, Ecuador and Argentina—moderate nationalism limited to further protection of the national company combined with controlled intervention of the private sector, like in Brazil and Mexico.
Mineral endowment has contradictory effects on economic development and democracy. For instance, early works on Venezuela used to emphasize the negative effects of the rentier state on democratic institutions (Karl 1997; Ross 2001) but more recent studies have shown that oil rents might as well have supported democracy at least until the 1990 crisis (Dunning 2008; Ross 2012). This controversy underlies how much public policies and political institutions are key to explain the State’s capacity to cope with the effects of price shocks and rent booming, while attending social demands. In particular, social and political accountability are at the core of the discussion for they constitute the ultimate safeguards against patronage and corruption (Karl 2007).
The determinant of resource nationalism is a government’s technical and financial needs, and their capacity to invest and develop the extractive sector in absence of foreign direct investments (FDI). The bottom line is the more a country depends on a single resource extraction, the more it controls FDI. Things are slightly different in countries where access to strategic resources like oil is difficult, or when the resource endowment has created a dependence on a single source of rents. The initial stage is also key to explain further developments of resource nationalism, whether oil discoveries happen in a context of high or low prices, and can be exploited by existing national oil companies with high or low technical and financial capacities.
On the one hand, the more a country has access to cheap oil (which can be measured in different ways, like the drilling success rate, production costs, proven reserves and tradable volume) or other minerals, the less a government needs to sacrifice a it’s sovereignty to attract FDI, the more it tends to radicalize resource nationalism. This would explain why Venezuela, Ecuador and Bolivia have been through less radical reforms than Brazil, and why Colombia and Mexico progressively opened their extractive sector to the private sector. On the other hand, since private investments require information and legal security, if a government wants to attract FDI they have to foster accountability, at least between the State and economic actors.
But what about accountability by the State towards citizens? How is it affected by resource nationalism? Our argument is that resource nationalism hinders accountability at different levels when mineral prices are high. It affects vertical accountability because the incumbent benefits more than outsiders from those rents, which affects the laters’ chances to be elected. It also affects horizontal accountability since the executive concentrates power over the judicial and the legislative, which affects the effectiveness of balance agencies. It affects social accountability because the government controls information and social groups through dedicated agencies.1
On the hand, the degree to which resource nationalism affects accountability depends on the modalities of the implemented nationalist reforms. The three countries where the most radical reform have been implemented since the 2000s (namely Bolivia, Venezuela and Ecuador) registered the lowest scores and rank among the worst countries in Latin America of the Resource Governance Index (NRGI 2017).2 But the paradox is countries where a moderate resource nationalism has been implemented (Brazil and Mexico) register the highest scores and rank among the best countries in the region. Between these extremes are countries where the extractive sector remains market-driven with a minimum degree of State intervention (Peru, Trinidad and Tobago, Colombia and Chile). In other words, the incidence of ideas on policy outcomes depends on institutional factors.
2 General Aims
The ultimate goal of our research was to explain consistently the role of ideas and institutions in policy outcomes. We were seeking for a causal mechanism linking ideas and policy outcomes through institutional arrangements. In particular, we focused on policy design to describe the role of instruments selection and combination in improving or reducing social and political accountability. More specifically, drawing from the case of public accountability deficits in oil and gas exporting countries, we intended to shed light on the relation between resource nationalism and democracy.
Ideas are arguably a catch-all concept, difficult to observe empirically and to measure, if not by narratives, discursive analysis and thick descriptions. In policy analysis, they are generally considered an “insufficient but necessary part of a condition which is itself unnecessary but sufficient for the result” (INUS) (emphasize is ours...