Chapter 10: States and Markets in the World Economy


Join international institutions
This approach entails joining the World Trade Organization, the International Monetary Fund, the United Nations, and regional free-trade organizations. These organizations will integrate your domestic industries into the broader world economy for better or worse. Joining these organizations will also promote linkages with other capitalist countries and potential allies.


You have chosen a pure economic liberalist path. Your infant domestic industries are fully open to both domestic and international competition. That being said, absolute gains will be made, and your domestic economy can benefit from specialization and access to more markets and resources. Furthermore, the institutions have increased your linkages with the capitalist bloc. As a result, the US has begun broaching the idea of a security agreement with Chechnya. The Russians approach the Chechen president and offer to sell oil at a discounted rate and/or provide the Chechen government with unconditional loans. Then, the President asks you: Chechnya is a developing country and stands to benefit from the proposed economic relationship, but do the economic benefits outweigh the harm to your political autonomy (Russia would have leverage over Chechnya because it could cut off energy/capital whenever it wanted to)?

What do you do now?

Accept the offer for cheap Russian oilThe discounted energy resources will more easily enable Chechnya to develop its infant domestic industries and/or build up its military. No other fossil fuel suppliers in the world are willing to offer energy resources at anywhere near that low a price. This means the deal would create Chechen dependency upon Russia because the Russians could cut off the energy supply whenever they liked.
Accept the offer for unconditional loansRussian capital would allow the Chechen government to more easily invest in its economic or military development in the short term. This would also result in Chechen dependency upon Russia because the Russians could cut off financial assistance whenever they liked and/or demand immediate payment. If the Russians demanded immediate payment, Chechen economic growth would likely be disrupted, given the government's need to collect greater resources from domestic industries to pay off the Russians.
Accept both offersSee above for the risks and benefits. This could benefit Chechnya greatly in the short term, but would also create a large dependency upon Russia in the long term.
Reject both offersThe risks of dependency on communist Russia outweigh the short-term benefits of economic assistance.