Global Investing

What chances true democracy in oil-rich Iran?

Truly, oil can be a curse. Having it may enrich a country (more likely its rulers) but it does not seem condusive to democracy. And the more oil a country produces, the less likely it is to make the transition to democracy, according to research from investment bank Renaisssance Capital.

So as Iran goes to the polls today, what are the chances it will become a democracy? (Iran itself could argue, reasonably enough, that it is the most democratic country in the region — everyone over the age of 18, including women, are allowed to vote, though the choice of candidates is restricted)

Surprisingly, the Renaissance report’s author Charles Robertson concludes, Iran does have a chance to achieve democracy, though probably not this year. He says no oil exporting country that produces more than 150,000 barrels per day of oil per million of population has ever achieved a transition to democracy (note Norway was already a democracy before it found oil). But others which produce less oil have done so, notably Algeria, Gabon, Congo Indonesia, Nigeria and Ecuador (Some of these democracies are clearly flawed). Robertson writes:

This suggests that the Gulf states, Equatorial Guinea, and Brunei willl not change their political systems until their energy wealth dries up. ..Yet Iran’s net exports are 32,000 bpd per million people. This is insufficient to immunise it from democratisation pressures.

If Iran was not blessed with oil however, its per capita income of over $10,000 means it would probably have been a democracy. (Though it is equally possible that without the oil it may not have that wealth) Robertson’s “democratisation database” tells him an autocracy with per capital incomes of $6000 to $10,000 has a  6.4 percent chance of a transition to democracy. If incomes are shrinking the odds rise to 15.5 percent.

from Jeremy Gaunt:

Democracy and Chaos are both Greek

It seems as if almost everyone was surprised by Prime Minister George Papandreou's decision to hold a referendum on the euro zone's bailout package for his country. At the very least, it can probably be said that he is weary of being hammered from all sides --  his own party, the opposition, the people on the street, Germany, the tabloid press, you name it.

A lot will obviously depend on what question is asked. Do you want an end to austerity, would get a clear yes vote. Do you want to leave the euro zone -- perhaps not.

Financial markets, however, do not initially appear content to wait.  Talk of an end-of-year rally is off the table (at least for now).  It's not exactly χάος (chaos) out there, but Papandreou's  experiment  in δημοκρατία (democracy) has sent the whole euro zone project into a new, risky phase.

from MacroScope:

Give me liberty and give me cash!

Come back Mr Fukuyama, all is forgiven.

In his 1992 book "The End of History and the Last Man", American political scientist Francis Fukuyama famously argued that all states were moving inexorably towards liberal democracy. His thesis that democracy is the pinnacle of political evolution has since been challenged by the violent eruption of radical Islam as well as the economic success of authoritarian countries such as China and Russia.

Now a study by Russian investment bank Renaissance Capital into the link between economic wealth and democracy seems to back Fukuyama.

Looking at 150 countries and over 60 years of history, RenCap found that countries are likely to become more democratic as they enjoyed rising levels of income with democracy virtually 'immortal' in countries with a GDP per capita above $10,000.

from Global News Journal:

The Fire Next Time in Thailand

(Thai firefighters douse the Central World shopping mall building that was set on fire by anti-government "red shirt" protesters in Bangkok May 19, 2010.  REUTERS/Yannis Behrakis)

THAILAND/We were walking down Sukhumvit road in downtown Bangkok just after the 9 p.m. curfew  –  down the MIDDLE of a road that on any other Friday night would have been filled with honking vehicles,  hawkers, tourists and touts. We were escorting a colleague home from the temporary newsroom in that Reuters had set up at the Westin Hotel after we were chased out of our office near the red shirt encampment in central Bangkok. Not a creature was stirring. But what was that sound we kept hearing? Squeak, squeak, squeak.Then we saw them. Rats. Thousands of them.  Scurrying along in packs on the sidewalks, the streets, the closed-down Skytrain overhead, at the entrances to shuttered shops, around piles of garbage that had mounted in the Thai capital since the May 19th riots. It was like a movie about an urban apocalyptic event where humans are wiped out and the vermin are triumphant.

We walked past darkened Soi Cowboy, whose raucous go-go bars should have been crammed with visitors. “You know, it’s serious when Soi Cowboy is closed,” my colleague said. “Soi Cowboy never closes.”