| Resource Curse: The theory that influxes of wealth from the exploitation of natural resources, including energy deposits, can be a burden as much as an opportunity to countries that lack the political, economic and social infrastructure to handle such revenues effectively. |
| Stabilization Fund: A fund created by Russian President Vladimir Putin safeguard the huge profits derived from sales of oil and natural gas in recent years; these funds, now totaling $60 billion, can only be used to reduce Russia’s national debt or to support the national pension system. |
K. The Russian Stablization Fund
A few advanced countries have been more adept at dealing with the resource curse. Russia, for example, decided to prevent the “Venezualaization” of its economy when oil prices spiked in 2005 by following the model pioneered by Norway. Russian President Vladimir Putin created a Stabilization Fund so that the country would not “blow its oil windfall on profligate government spending, risking an unpleasant fiscal and economic crunch when oil prices fall.”1 The Fund, which topped the $100 billion mark in 2007, can only be used to manage the national debt and to bolster the country’s national pension scheme.2 It represents an attempt to create internal pressure to keep the government honest.
1 “Russia: The Curse of $50 a Barrel”
2 Kramer; “Russian Government to Decide”
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