The Soviet Economic Model: Institutions, Oil and Gas Resources and the Challenge of "Resource Curse"

Our study is based on new evidences, including those which are not known to the present time in scientific circulation and little-known sources from Khrushchev and Brezhnev funds, the Central Committee of the CPSU, the Council of Ministers of the USSR, the State Planning Committee of the USSR, the State Scientific and Economic Council of the USSR and the State Committee for Science and Technology of the USSR, and also the NATO Archive, allowing to analyze the political and economic institutions that formed the policy of using oil and gas resources in the Soviet economy in the so-called the period of the formation of the system of allocation "oil and gas rents" (the second half of the 1950s - the first half of the 1970s). In the second half of the 1950s - the first half of the 1970s soviet leaders, thanks to geological discoveries, received a large "prize", huge reserves of oil and natural gas in the Volga region, the North of Western Siberia and Central Asia, which they could use to achieve their strategic goals. Soviet leaders could choose three possible strategies - to limit the extraction of oil and gas resources by internal consumption ("gasification"), to recycle resources and export petrochemical materials (the "petrochemical project"), to increase the extraction and export of oil and gas resources ("oil and gas maneuver"). This article challenges mainstream of modern historiography about the single of the strategy of soviet leaders in the use of oil and gas resources in the 1960s - 1970s. In the choice of strategy, a significant role was played by interest groups - planners and ministers, their preferences about the economic value of oil and gas resources for the modernization of the Soviet economy. As oil and gas rents grew, interest groups began to fight ("rag war") for its allocation. In the case of the ''petrochemical project'' strategy in 1957-1964, for the ministers, the benefits of redistributing resources to the chemical industry were not too obvious, and the strategy of exporting hydrocarbon resources was more preferable, which eventually led to the abandonment of the petrochemical project and accelerated the formation of a "resource curse" in the Soviet economy, as gradually the priorities shifted from processing to exporting a crude oil. In the case of the "oil and gas maneuver" strategy for planners and ministers, the benefits of redistributing resources to the oil and gas complex were evident; they received an opportunity to purchase abroad equipment and materials in return. However, the implementation of the "oil and gas maneuver" strategy in 1972-1975 led to the rapid development of the "resource curse" in the Soviet economy and the planners saw no alternative to oil and gas rents as a source for the purchase of raw materials and technologies.