Energy, Wealth and Governance in the Caucasus and Central Asia Lessons not learned

Drawing upon recent progress in development economics and political science, the book provides fresh analysis of the Caucasus and Central Asia (CCA) countries transition to a market economy by tracing the impact of natural resource endowment. The book examines the synergies between energy-rich and energy-poor states and highlights the practical consequences of both well-managed and poorly-managed deployment of energy. Featuring contributions from prominent specialists on resource-driven economies, the book argues that unless CCA elites change the way in which they deploy natural resource, revenues regional development will fall short of its potential with possible disastrous consequences. The contributors apply the experience of the developing market economies to demonstrate that the region still holds considerable potential to become an important, stable supplier of raw materials and a source of industrial demand to the global economy. However, the CCA is equally likely to become a threat to the global economy as a consequence of the misuse of energy revenues to promote the interests of predatory political elites.

List of Tables List of Figures Contributors 1. Introduction 1. Transition to Mid-Income Democracies or to Failed States? Richard Auty 2. Resource-Driven Models of the Development of the Political Economy Richard Auty 2. Transition Trends and Scenarios Within the CCA Region 3. Nature’s Blessing or Nature’s Curse: Political Economy of Transition in Resource-Based Economies Akram Esanov, Kansas State University, Martin Raiser, World Bank, and Willem Buite, EBRD 4. Optimistic and Pessimistic Energy Rent Deployment Scenarios for Azerbaijan and Kazakhstan Richard Auty 5. Resource Abundance, Governance and Economic Performance in Turkmenistan and Uzbekistan Richard Pomfret, University of Adelaide 6. Transition and Economic Development Challenges in the Resource-Poor Countries Cevdet Denizer, World Bank Part 3. Political Economy Constraints 7. Deficient Social Capital and Its Consequences for Economic Reform Erica Johnson, The National Bureau of Asian Research 8. Incentives to Reform in the Caucasus and Central Asian Political States Richard Auty and Indra de Soysa, Center for Development Research, University of Bonn4. Synergies of Resource-Rich and Resource-Poor CCA Countries 9. The Importance of Good Neighbors: Regional Trade in Central Asia Clemens Grafe, Birkbeck College, London University, Martin Raiser, World Bank and Toshiaki Sakatsume, EBRD 10. Environmental Problems and Solutions in the Caspian and Aral Basins Anil Markandya, World Bank and Richard Auty 11. Regional Threat Perceptions and Risks of Military Conflict Roy Allison, Royal Institute of International Affairs and Oxford University 5. Assessing the Strength of External Leverage on the CCA Political Economy 12. Prospective Impacts of Russian and Iran Mark Katz, George Mason University 13. China, Russian and Energy in the CCA Region and East Asia Charles Ziegler, University of Louisville 14. The Effectiveness of Western Leverage: IFI Projects and Programs Robin Bhatty, Cambridge Energy Research Associates and Richard Auty 6. Conclusion 15. Conclusion: Lessons Not Learned in the CCA Countries? Richard Auty

Richard Auty is Professor of Economic Geography at Lancaster University, UK. Indra de Soysa is Associate Professor of Political Science at the Norwegian University of Science and Technology.