MOSCOW — Can Russia escape the "resource curse" implied by high oil prices, or will it succumb to what we call a "70-80" scenario? That is the question confronting Russians today, and we fear that their fate will be the latter: If oil prices remain at $70 to $80 per barrel, Russia is likely to relive key features of the Brezhnev era of the 1970s and 1980s — with a stagnating economy and 70 to 80 percent approval ratings for its political leaders.
The resource curse means, of course, that Russian elites will prefer to postpone restructuring the economy and modernizing the country's political and economic institutions. This will undermine economic performance, making it very unlikely that Russia will catch up with the advanced economies in the next 10-15 years, as officials promise.
Fast and sustainable economic growth requires the rule of law, accountable, meritocratic, and noncorrupt bureaucrats, protection of property rights, contract enforcement, and competitive markets. Such institutions are difficult to build in every society. In Russia, the task is especially problematic, because the ruling elite's interests run counter to undertaking it.
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