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Hard Times in the Lands of Plenty: Oil Politics in Iran and Indonesia.

Article Excerpt
Hard Times in the Lands of Plenty: Oil Politics in Iran and Indonesia. By Benjamin Smith. Ithaca and London: Cornell University Press, 2007. Softcover: 239pp.

Analysis of the potentially destabilizing impacts of resource booms on developing countries continues to be very relevant for Southeast Asia. Cambodia, Myanmar, Timor-Leste and Laos, some of the region's poorest countries, all face the prospect of large petroleum and/or mineral revenues over the next decade.

Few would argue that they should leave it in the ground. But the fear is that sudden, large injections of resource derived revenues, if not carefully managed, will distort their small and developing economies. Appreciating exchange rates and rising inflationary pressures could squeeze other traded (and much more labour intensive) sectors--manufacturing and agriculture--and may leave the economy vulnerable to dislocation from commodity price falls. Politically, resource revenues that directly accrue to governments in states where institutions and public sectors are weak may not be used to fund infrastructure, health and education, but may be squandered through misuse and corruption.

For authoritarian states, these revenues can nevertheless be windfalls that allow regimes to maintain their heavy-handed...

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