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Guyana: Waiting for ICJ Decision, but also Investing in Security; Part II

by guyanabusinessjournal
written by guyanabusinessjournal

Guyana: Waiting for ICJ Decision, but also Investing in Security; Part II

By

Ivelaw Lloyd Griffith

 

This is the second article of a two-part series on the ongoing territorial-judicial saga between Guyana and Venezuela. The first one examined some recent developments in Guyana’s oil exploration and production landscape, which have increased the stakes for the two oil-rich nations. In this concluding article we examine the security investment imperative the government has been pursuing while it awaits the ruling of the World Court.

Moutar and Guitar

Budgetary and other recent actions by the Guyana government suggests that investing in security assets isn’t just attracting platitudes, but tangible action. To use Guyanese parlance, the authorities aren’t just “playing moutar, but also guitar.” Put differently, they are putting their money where their mouth is. For one, budget allocations for this year adopted by the National Assembly for the security services suggest that the government takes the investment in security assets imperative seriously, conscious that the security sector agencies have serious deficits in personnel, equipment, and training.

The budget itself—G$781.9 billion (US$3.7 billion)—is the largest ever in the country’s history. It represents a 41 percent increase over the outlay for 2022, with almost 30 percent drawing on oil revenues, to the tune of G$208.9 billion (US$ 992 million). Moreover, for the first time ever, use has been made of funds from the sale of carbon credits, in the amount of G$31.3 billion (US$149 million). The carbon credits deal was made last year with the Hess Corporation and provides for a minimum of US$750 million to the Cooperative Republic between 2022 and 2032. The initial US$75 payment was made in January 2023 and two additional payments are expected later this year.

The allocation for the army increased from G$17,631,014,000 (US$83,165,493) in 2022 to G$20,228,261,000 (US$95,416,707) for this year. The Guyana Defense Force (GDF) identified some pretty aggressive goals for 2023, including increasing the number of foreign threats averted from two in 2022 to 20 this year, growing the number of officers trained by 100 percent, from 40 last year to 80 this year, and expanding joint exercises from 12 in 2022 to 20 this year. Although there is considerable attention to the police force and other internal security agencies in the 2023 Budget Speech, there was absolutely no mention of the GDF.

As for the police and other internal security agencies, the funding grew from G$51.5 billion (US$242,925,500) expended in 2022 to an allocation of G$58.6 billion (US$276,416,200) for this year. This included G$2.4 billion (US$11,320,800) to upgrade police stations and facilities, money to increase force mobility, and G$2 billion (US$9,434,000) to expand the safe city program in two of the country’s ten administrative regions, key to which is the provision of Intelligence Video Surveillance Command Centers and 911 emergency response capability in those regions.

Security investments and cautionary note

The recent investment in security assets began modestly yet importantly in March 2021 with the commissioning of a new American-made Bell412 EPi medium lift helicopter, acquired for US$9.5 million. This additional resource for the GDF was to enable them to monitor the nation’s fisheries zone, conduct search and rescue operations, and move troops around the country. Three months later the government announced the US$11.5 million order of a monohull patrol vessel from the Louisiana-based ship builder Metal Shark to boost the Coast Guard’s efforts to patrol its Exclusive Economic Zone and fight piracy and illegal fishing.

Mindful of the need to avoid putting all security asset eggs in one acquisition basket, following a visit to India in January this year, President Mohamed Irfaan Ali expressed interest in purchasing two Hindustan Aeronautics Limited, HAL Dornier 228 for the GDF Air Corps, which has a serious aircraft deficit. The two 19-seater Short Takeoff and Landing (STOL) planes will be used to ferry troops and supplies to military bases across Guyana, assist maritime patrols, and transport VIPs.

The security investment from India is part of a broader strategic partnership between the two countries, in the areas of oil and gas, food security, and technology. One hopes that the diversification of security assets soon would be extended to Brazil, an established arms manufacturer with a wide portfolio, with which Guyana once had a strong relationship and remains a key actor in the geopolitical relationship involving Venezuela, as well as a valued ally in the proposed tripartite energy security partnership that would include Suriname.

The security partnership with the United States continues to be strengthened, notably is the three-day visits by SOUTHCOM Commander Admiral Craig Faller in January 2021 and last August by his successor, General Laura Richardson, to meet with political, military, and civic leaders about enhancing security ties between the two nations. Guyana also hosted the SOUTHCOM-sponsored Tradewinds 2021, a training exercise with ground, air, sea, and cyber aspects that brings together forces from the United States and Caribbean and other nations.

Noteworthy, too, Guyana has joined the Barbados-based Regional Security System (RSS). In March 2022 President Ali signed the RSS protocol while in Belize for a meeting of CARICOM leaders, and the following September Guyana formally became the eighth member when President Ali signed the instrument acceding to the RSS Treaty, joining Antigua and Barbuda, Barbados, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines in the alliance that dates to 1982, becoming the member with the largest army. Incidentally, both the GDF and the Guyana Police Force (GPF) will participate in the RSS, as is the case with the other RSS members that have both defense and police forces.

For all the commendable investment in assets and strengthening of strategic partnerships, a cautionary note is warranted. Guyana faces both traditional and non-traditional security threats, notably territorial claims by both Venezuela and Suriname in the traditional area, and narco-trafficking, crime and violence, illegal migration, and human trafficking in the non-traditional one. Thus, even with the recent and planned investments the country’s security establishment, it will still face serious capability limitations in terms of personnel, equipment, and training.

However, there may be a risk that leaders in Guyana either are under-appreciating the scope of the threats, over-estimating the extent to which the new assets will address the security deficits, or both. A danger in the offing makes this conclusion plausible. The danger is what military professionals call mission creep: the gradual or incremental expansion of an organization’s mission beyond its original focus or goals, which risks compromising its overall efficiency and operational success because of the lack of commensurate resources to accomplish the expanded mission.

Recent pronouncements at the army’s 2023 officers conference, held on February 9 last, portend such a danger. The Commander-in-Chief contended that in addition to meeting the nation’s security challenges the GDF should rise to the challenge and consider how it will address issues such as the food and energy crises not only in Guyana but in the region.  He also touted the idea that the Air Corps could expand its mandate and conduct forest monitoring activities, arguing that “the monitoring of our forest is part of our defense challenge, because it is an important national asset, earning revenue.”

Moreover, the president advocated a role for the GDF in the development of emergency mapping services, noting “In every region, I am tired with the fire tender turning up and they don’t know where the drain is, they don’t know where the trenches are… Is there a cluster map? How do we develop a cluster map for every region, and then a cluster map for different communities?”

In sum, as the waiting game plays itself out, Guyana is making prudent and pragmatic investments in security assets.  Nonetheless, the leaders there might do well to guard against mission creep, lest they compromise the ability of the army to deliver effectively on its core mission and undermine the confidence of citizens in both them and it.

 

______

Ivelaw Lloyd Griffith, a former Vice Chancellor of the University of Guyana, is a Fellow with the Caribbean Policy Consortium and Global Americans. His next book, Challenged Sovereignty: The Impact of Drugs, Crime, Terrorism, and Cyber Threats in the Caribbean, will be published by the University of Illinois Press.

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CommentaryGeopoliticsOil Sector Policy

Guyana: Waiting for ICJ Decision, but also Investing in Security, Part 1

by guyanabusinessjournal
written by guyanabusinessjournal

Guyana: Waiting for ICJ Decision, but also Investing in Security; Part 1

By

Ivelaw Lloyd Griffith

This is the first of a two-part series on the ongoing territorial-judicial saga between Guyana and Venezuela. Here we provide some recent developments on Guyana’s oil exploration and production landscape, which have increased the stakes for both nations. In Part II, we examine some of the security investments the government is making while the judicial drama plays out.

Waiting, but …

In a two-part series in OilNOW last fall I described the Guyana-Venezuela territorial drama as a waiting game, in that it evokes memories of the award-winning play Waiting for Godot by the famous Irish playwright Samuel Beckett. The waiting game began in 1962 when Venezuela first formally challenged the validity of the Paris Arbitral Award that had settled the dispute between the Bolivarian Republic and Great Britain over the colony then called British Guiana in 1899. The drama assumed new dimensions when, with green-lightening by the United Nations Secretary-General, Guyana took the matter to the International Court of Justice (ICJ) in 2018 after other resolution efforts pursued over several decades had failed.

In keeping with its rules, the Court needed to consider whether it had jurisdiction to hear the case. After deciding in December 2020 that it did, indeed, have the relevant jurisdiction, in March 2021 it gave Guyana until March 8, 2022, to submit its Memorial (case brief) and Venezuela until March 8, 2023, to present its Counter-Memorial. The expectation was that all things considered, a ruling on the substantive case would be made by March 2024.

However, the waiting game assumed new dimensions last June when Venezuela filed preliminary objections to the admissibility of Guyana’s petition. Under ICJ rules, the proceedings on the merits had to be suspended. Guyana was then given until October 7, 2022, to file a response to the objections and the Court held hearings on the preliminary objections from November 17 through November 22, last. The Court likely will render its judgment on Venezuela’s objections by the end of this coming April. So, the waiting game continues.

Waiting is not a strategy, though. As such, the government has been aggressively pursuing its national development goals, including extracting more of its newly found natural resource and investing some of the revenue derived from it. As Finance Minister Ashni Singh reported in his January 16, 2023, Budget Speech in the National Assembly, 2022 was an exploration banner year: 11 new wells were drilled, 10 of them being in the now famous Stabroek Block, which extends over 6.6 million acres (26,800 square kilometers) of maritime space. The new discoveries brought the total discoveries to 40, with 35 in Stabroek alone. Moreover, in December 2022, the authorities launched a new Licensing Round, which will run through this coming April.

Production continued apace, allowing for 102 lifts of crude oil, with revenues augmenting the sovereign wealth fund, called the National Resource Fund. Last year the Fund received just over US$1,099 million. After the transfer of US$607.6 to the government’s budget to fund various initiatives, the Fund had a 2022 end-of-year balance of US$1,271.8 million. The new year brought new bounty to the Land of Many Waters, with an additional discovery on January 23 in the Fangtooth SE-1 well, also in the Stabroek Block.

Towards 1 million barrels per day

Also noteworthy is that the Payara project is expected to begin production later this year, yielding some 220,000 barrels per day, and another project, named Yellowtail, is expected to come on stream in 2025 and produce about 250,000 barrels of crude per day. This should be followed by the Uaru project, which is anticipated to produce another 250,000 barrels per day following start-up in 2027. As a result, the country is set to produce about one million barrels per day before the sun sets on the current decade.

Although Venezuela’s energy profile dwarfs that of Guyana, South America’s sole English-speaking republic now boasts having proven more than 11 billion barrels equivalent of recoverable oil and gas. In all likelihood, this figure will increase as exploration continues to reveal the existence of more black gold. Consequently, Guyana is well positioned to reap enormous wealth, which would enable the nation to be propelled into a development stratosphere not contemplated a few years ago. Indeed, last year the non-oil real GDP growth was pegged at 11.5 percent and the overall economy was estimated to grow by some 62 percent, making Guyana’s economy the fastest-growing one in the world.

There is, therefore, confidence in robust economic growth and long-term revenues from oil. Last month the finance minister assured parliament that “there will be 136 lifts of profit oil from the Stabroek Block in 2023. Within this, Government is projected to have 17 lifts of profit oil from the producing FPSOs (Floating Production, Storage and Offloading vessels), earning an estimated US$1,406.6 million in profit oil and US$225.2 million in royalties in 2023.”

Thus, the waiting game continues. But Guyana’s leaders do not have the luxury to simply wait on the ICJ decision; they have the obligation to attend contentiously to the welfare of the nation, which includes addressing matters crucial to its national interest, a key aspect of which pertains to its territorial integrity. In this respect, in a May 2021 OilNOW opinion, I argued that pragmatism necessitated the pursuit of complementary imperatives – things that need to be actioned, not just spoken about. For me—then and now—three key imperatives pertain to public education, diplomacy, and investing in security assets. Commentaries on the first two are reserved for another time, but the third imperative—investment in security—will be the subject of attention in Part II.

______

Ivelaw Lloyd Griffith, a former Vice Chancellor of the University of Guyana, is a Fellow of the Caribbean Policy Consortium and Global Americans. His next book, Challenged Sovereignty: The Impact of Drugs, Crime, Terrorism, and Cyber Threats in the Caribbean, will be published by the University of Illinois Press.

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CommentaryEducationOil Sector PolicyPrivate Sector and Business OpportunitiesWorkforce Development and Training

Agriculture and the Oil and Gas economy

by guyanabusinessjournal
written by guyanabusinessjournal

Agriculture and the Oil and Gas economy

By

Utamu Belle & Dr. Terrence Blackman

The ninth installment of the Guyana Business Journal (GBJ) and Caribbean Policy Consortium (CPC) webinar series, “Transforming Guyana,” focused on “Guyana’s Agricultural Sector and the Oil and Gas Economy.”

Farming and energy production are seemingly disparate industries, yet they have a bond. Agriculture necessitates utilizing energy resources, like fossil fuels, and producing fertilizers and pesticides. The extraction, transportation, and utilization of fossil fuels can positively and negatively affect agriculture. Because of this interplay, this episode considered the agricultural sector in Guyana and its essential role in Guyana’s emerging Oil and Gas economy.

In his opening remarks, Dr. Lewis reflected on his first visit to the country in 1982, when there was a discussion of the potential for Guyana to become a major food producer in the Caribbean. He pointed out that this transformation did not materialize due to investment needs, technology, infrastructure, and other resource limitations. He defined the present task as leveraging these linkages to contribute to Guyana’s growth and development. He observed, “Because Guyana, regardless of how big and how dominant the oil and gas sector is going to become, beyond the numbers and the statistics, what’s going to happen is the rest of the economy needs to continue to live, and we need to find ways to get that to leverage.”

Dr. Chesney, a leading agricultural professional in the Caribbean who was awarded the Golden Arrowhead of Achievement for his contributions to agricultural development in Guyana and the Caribbean, emphasized that one must understand Guyana’s agrarian sector through its critical link to regional agriculture and food security. Dr. Chesney stressed that Guyana has fully embraced this idea. He noted that in 2020, the nation had taken the initiative of Caricom in agriculture and had been fundamental in accelerating the process, referring to the various farming projects carried out by the present government. Dr. Chesney emphasized that agriculture is not simply providing food and producing primary commodities. Instead, he stated that it is essential for the region’s sustainable progress. Within this context, Dr. Chesney noted that the oil and gas sector provides the opportunity for increasing agricultural activities: “With the proposed refinery and gas-to-shore project, we can produce inputs, whether it be fertilizers, pesticides, et cetera, and better processing capacity because of the cheaper electricity that would be provided.”

He noted that this is a chance to evolve and modify Guyana’s agricultural industry, encouraging individuals to view it as an enterprise rather than an exclusively labor-intensive pursuit. He believes involving traditional farm product exporters would help provide a steady market with fair prices and benefit the region’s overall agricultural sustainability.

Dr. Chesney also called for eliminating current obstacles to regional trading, such as inadequate transportation infrastructure, preventing this sector from being more active. Additionally, Dr. Chesney mentioned that non-tariff limitations, such as food safety standards, financing, communication, and geospatial diversification, must be addressed.

Joel Bhagwandin, a professional in the business and finance industries who has worked for over 15 years in the financial sector, reported that Guyana is progressing toward its aim of being developed by 2025. He stated that if one looks at the agricultural GDP growth of the previous ten years, the nation achieved the most significant growth in 2022 at 12 percent, its highest since 2013.

Bhagwandin remarked that the budget for 2020 to 2023 had grown by 65 percent, taking it to a total of GY$15 billion dollars from GY$9.4 billion dollars. He also highlighted that the agricultural sector makes up 25% of the non-oil GDP. He then explained that the government invested in the industry to increase food production and improve regional food security. However, this should be looked at in context with the other sectors. To further this goal, Bhagwandin asserted that infrastructure investments and energy projects were essential for creating value-added products and decreasing energy costs.

When posed a query by a viewer regarding an opinion piece that declared the Dutch disease was “damaging Guyana’s agricultural industry,” The Dutch disease is an economic term for the negative consequences that can arise from a spike in the value of a nation’s currency. It is primarily associated with the discovery or exploitation of a valuable natural resource and the unexpected repercussions that such a discovery can have on the overall economy of a nation. Bhagwandin denied this was accurate. He highlighted that if the exchange rate were to surge, it would cause agricultural exports to decrease since they would become more expensive, and he noted that this is not occurring. He said that while the government is creating a healthy atmosphere for farming, he believed that Guyana’s corporate sector needed to be more creative to take advantage of the opportunities in the agricultural industry.

Dr. Chesney commented that when agriculture is affiliated with the Caribbean Single Market and Economy (CSME), the migration of skills becomes crucial. He emphasized that “there is a lack of expertise, not necessarily a lack of labor, in addition to a lack of organization. Some of us are collaborating with universities to investigate how their curriculums can be improved to meet the demands of the intersection of the Region’s agricultural and oil and gas sectors. You must start putting in place that training capacity, enhancing the human capacity of the region to be able to provide the skills that are required.” He also pointed out that it would be unfair to suggest Guyana will experience the resource curse, the significant social, economic, and political challenges unique to countries rich in oil, gas, and minerals due to the relatively well-managed oil and gas industry.

In response to a question posed on efforts being made by the government to give investors confidence to enter the market, Bhagwandin said he is unaware of institutional barriers from a governmental perspective to enter the agricultural sector. He noted, however, that some bureaucracy is related to processes such as approvals, processing of licenses, etcetera. He said the government is investing in improving the overall public service delivery.

As highlighted in this month’s episode of Transforming Guyana, there are many ways in which Guyana’s agricultural and oil and gas sectors can leverage each other to contribute to and drive economic growth. Dr. Chesney predicts that the country will see steady growth in this sector in the coming years, with investment in infrastructure, training, international trade agreements, and business-to-business relationships, and he has cautioned us to manage this growth in the best possible way to ensure optimal outcomes for Guyana and the Guyanese people.

 

 

Utamu Belle

Utamu Belle is an award-winning Guyanese journalist with a career spanning over a decade. Her experience includes writing for print, television, and online media. In addition, she has worked as a Radio and Television host. She is the Founder of A-to-Z Media (Guyana), a News and Digital Editor with Upscale Magazine, and a Digital Coordinator/News Editor with The Guyana Business Journal and Magazine. 

Dr. Terrence Richard Blackman is a member of the Guyanese diaspora. He is an associate professor of mathematics and a founding member of the Undergraduate Program in Mathematics at Medgar Evers College. In addition, he is a former Dr. Martin Luther King Jr. Visiting Professor at MIT and a member of The School of Mathematics at The Institute for Advanced Study. He previously served as Chair of the Mathematics Department and Dean of the School of Science, Health, and Technology at Medgar Evers College, where he has worked for more than twenty-five years. He graduated from Queen’s College, Guyana, Brooklyn College, CUNY, and the City University of New York Graduate School.

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Commentary

Commentary, On the Opportunities, success, and vulnerability of the Diaspora

by guyanabusinessjournal
written by guyanabusinessjournal

 

The Caribbean diaspora, particularly in the United States, has been successful and accomplished in their adopted home. However, one must not lose sight of the fact that, like their Proximate group, i.e., other “people of color,” they have been labeled among the personae non-grata by those who fear the browning of America. Moreover, their racial/ethnic hue and immigrant status are also targets of a paranoiac “cancel culture” and “replacement theory” syndrome. Such phenomena likely charged the recent mass shooting in Buffalo, New York. It was reported that one of the victims of that shooting is of Guyanese heritage.

According to one expert, the perpetrator of the Buffalo shooting had “pent-up frustrations” triggered by the aforementioned sinister ideology. Mental illness may be an underlying contributing factor, but those who attempt to explain away the brutal, racist acts tend to use this human malady to justify such viciousness. Most people with mental health problems are not violent. Apart from access to dangerous weapons, “mass shootings” are more likely to be ignited by spurious indoctrination, hatred, and prejudice. Some perpetrators are influenced by the rhetoric of “extremists” whose ideology creates a culture of hate, preying upon isolated, disaffected youth. This situation is a hidden dimension of tension and potential endangerment of people in the diaspora.

In this light, it is essential that “immigrants of color,” like other segments of the population, (1) are aware of the safety and security of their social spaces and (2) develop a critical consciousness about the history and socio-political realities of their adopted home (3) note that within any single culture/society, people have different values (4) should embrace authenticated truths, self-respect and respect for others. However, it must be understood that the general public has the right to protection under the law. Civility, human rights, and inclusion should be reflected in what is taught across racial, political, and ethnic groups, regardless of citizenship or immigration status. The intended audience of this commentary – civil society and leadership – is challenged to think carefully about the undergirding reality of ethnic relations and international and political tensions. To deal with them constructively, sometimes it is necessary to figuratively “go to a place” that feels uncomfortable and has difficult conversations. Understanding the experience, influences, trauma, and pain of a group with whom one shares a common space is therapeutic and educational.

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CommentaryGovernance and TransparencyOil Sector Policy

Beating The Resource Curse

by terrence richard blackman
written by terrence richard blackman

Beating The Resource Curse

By

Terrence Blackman, Ph.D.

ExxonMobil initiated oil and gas exploration activities in Guyana in 2008. The company drilled, safely its first exploration well, Liza-1, in 2015. The Payara, Snoek, Liza Deep, and Turbot discoveries followed in 2017, and in 2018, ExxonMobil announced the Ranger, Pacora, Longtail, Hammerhead, and Pluma discoveries. The Tilapia, Haimara, Yellowtail, and Mako discoveries emerged in 2019, and in 2020 the Uaru, Yellowtail-2, and Redtail discoveries. The discovery rate of significant-high-quality oil wells on the Stabroek Block has been nothing short of amazing. The gross recoverable resource for the Stabroek Block is now estimated to be more than nine billion oil-equivalent barrels. 

The sheer volume of these discoveries confirms that the Guyanese people are blessed with an opportunity for a fundamental societal transformation. However, to make it happen, Guyana must overcome the resource curse. Scholars have identified a resource curse that often befalls countries possessing significant reserves of resources of crude oil, rubber, natural gas, or rare-earth commodities. Economies with abundant natural resources grow less rapidly than natural-resource-scarce economies. Moreover, resource abundance frequently displaces the growth-essential manufacturing sector, leading to Dutch Disease. Countries see an appreciation of real exchange rates that negatively affect other economic sectors, especially manufacturing exports. In addition, they experience greater financial volatility as revenues are linked to global market swings. Marked increases in corruption and mismanagement often accompany this economic volatility. Some research even suggests that abundant natural resources is connected to a propensity for violent conflicts.

Guyana’s newfound oil wealth invokes optimism and worry and demands a strategy to prevent the resource curse. We share Sean Durns’ examples of four countries that beat the resource curse and identify critical components of a plan to ensure that Guyana beats the resource curse.

Canada holds the world’s third-largest oil reserves. It is also a significant mining power, the third-largest producer of primary aluminum and diamonds, and the top five for cadmium, molybdenum, nickel, platinum group metals, salt, titanium concentrates, elemental sulfur, and uranium. Canada has thus far managed to beat the resource curse. Their success is attributed to how regulations and oversight are implemented and applied. Royalties, taxes, incentives, permits, and licensing for oil and natural gas are done through provincial bodies. At the same time, a federal National Energy Board, which reports to Parliament, oversees the regulation and is partnered with respective provinces in offshore drilling. 

In 2020, Chile’s copper mine production was estimated at 5.7 million metric tons of metal content, representing 28.5 percent of the global copper production that year.

\While the importance of copper to the economy certainly leaves room for susceptibility to commodity booms and busts, Chile has beaten the resource curse in large part due to an extremely high degree of transparency. Information on both operations and revenues is regularly published by the Finance Ministry, along with comprehensive looks at royalties, taxes, mining export values, production volumes, environmental assessments, and licensing petitions. 

Norway’s approach to its vast oil and gas reserves has been to set aside the majority of its oil earnings from taxes on the petroleum industry and lease sales to private companies. Officially known as the Government Pension Fund Global (GPFG), the fund has the mandate of preserving and increasing Norway’s profits from oil for future generations. As a result, the government does not spend oil revenues – instead, the entire income from petroleum activities is invested in the fund. As a result, the government will only dispose of the expected yearly return on the fund, which was limited to 4 percent by its 2001 fiscal policy and reduced to 3 percent in 2017. Mindful of the challenges associated with abundant non-renewable resources, the Norwegian government chose this approach to prevent the country from falling victim to the resource curse while extending the benefits these resources confer beyond short-term gains. This mindset — along with concerns about currency appreciation and cash inflows becoming too tightly intertwined with the government — has prevented public officials’ wealth concentration, currency appreciation, and mismanagement and corruption.

Botswana, Africa’s top diamond producer, sits second in the global list of producers of diamonds. Yet, in stark contrast to many other resource-rich African countries prone to conflict and corruption, Botswana has beaten the resource curse. The export contribution of mining is highest in Botswana, Sierra Leone, DR Congo, and Mongolia at 80–90% of total exports; however, Botswana has dramatically diversified its economy. In addition, it is one of the least corrupt countries on the continent. Botswana has also remained conflict-free, encouraging business growth, regional investment, foreign direct investment, and stable governance. 

As new oil and gas resources continue to be discovered in Guyana, it is clear that Providence has bequeathed to Guyana a once in country’s lifetime opportunity for transformative development.  Whether Guyana realizes this opportunity is, the evidence indicates, essentially an issue of governance. These examples from four countries from different world areas, each with a different culture and history, offer concrete insights into how Guyana can avoid the resource curse and its concomitants. 

From Canada, we learn of the necessity for intelligent regulations and oversight, i.e., a regulatory system that’s apolitical and professional and minimizes political patronage. From Norway, we learn that setting aside a significant percentage of the oil earnings every year and taking out a portion of the interest earned on the fund to be used for public services prevents wealth concentration, currency appreciation, mismanagement, and corruption. It is important to note that the set-aside amount appropriate for an economy will vary with the country’s level of development—Norway was already an industrialized country when it discovered oil-it would be economically prudent for Guyana to spend a bit more upfront on things like infrastructure where it lags and has trouble diversifying as a result. Finally, we note that thus far that Guyana’s currency has been relatively stable, but the current inflationary trends need to be monitored carefully.

From Chile, it is evident that comprehensive transparency, i.e., regularly publishing information on operations and revenues, along with complete dissemination of royalties, taxes, mining export values, production volumes, environmental assessments, and licensing petitions, move us closer to beating the resource curse.

Finally, from Botswana, we learn that Guyana must pursue economic diversification; it must move revenues to other sectors to make the economy less susceptible to global markets and minimize internal conflict. We note here for a subsequent discussion that most of the Guyanese working population are employed in three sectors: Agriculture, Forestry, and Fishing; Wholesale and Retail trade; and Public Administration and Defense. 

The course Guyana needs to chart to beat the resource curse is clear. But can she find the consensus and the courage to take it?

About the Author

Dr. Terrence Richard Blackman, associate professor of mathematics and a founding member of the Undergraduate Program in Mathematics at Medgar Evers College, is a member of the Guyanese diaspora. He is a former Dr. Martin Luther King Jr. Visiting Professor at MIT and Visitor of The School of Mathematics at The Institute for Advanced Study. Dr. Blackman has previously served as Chair of the Mathematics Department and Dean of the School of Science Health and Technology at Medgar Evers College, where he has worked for almost thirty years. He’s a graduate of Queen’s College, Guyana, Brooklyn College, CUNY, and the City University of New York Graduate School.

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CommentaryDiaspora EngagementEducationGovernance and TransparencyGuyana News Updates

To Charrandas, or not to Charrandas? The Socio-economic & Political Forecast for Guyana 2019: Economic Growth & Political Uncertainty.

by terrence richard blackman
written by terrence richard blackman

 

To Charrandas, or not to Charrandas?

by

Dr. Carolyn Walcott & Dr. Terrence Blackman

 

This weekend the GBJ looks at the prospects for Guyana in 2019. Two weeks ago,  GBJ writer Dr. Carolyn Walcott visited Guyana for a few days to take the temperature of Christmas at home before the big day. As expected, the city was abuzz with activity; traffic was jammed at almost every corner, and business seemed bright! GBJ walked down Regent Street, beginning our trek from Albert Street and ending at the corner of Orange Walk. There was scarcely room to walk. Merchandise spilled onto the pavements, and shoppers deluged vendors with purchases and inquiries. Pedestrians and motorists seemed to merge into a single mass consumed with the hype that is often associated with Guyanese Christmas. There were many bargains to be had, and businesses, particularly the retail businesses, seemed to be doing well.

Christmas is typically the largest economic stimulus for many nations worldwide, as sales increase dramatically in almost all retail areas. The GBJ, in a future report, will quantify the monies generated during the 2018 holidays. It will also estimate the percentage of the retail industry’s total sales in the year that is generated at Christmas, and the increase in employment typically needed to support the Christmas season.

On our walk through the city, the GBJ noted a few striking social changes to the city’s holiday atmosphere. Spanish is now a language frequently spoken by store attendants, and we noted, with interest, the deluge of Chinese enterprises that permeate the fabric of the new business landscape of Guyana. However, business appeared good for everyone as the Guyanese prepared for the Christmas holidays.

On Thursday, December 13, the GBJ attended the University of Guyana’s Press launch of its first publication. Entitled “Dynamics of Caribbean Diaspora Engagement: People, Policy, Practice,” the book is an output of the Diaspora Conference, which was held in June 2017.  During the discussions, the issue of a business takeover by non-Guyanese emerged as both a question and a concern. However, it was quickly addressed by the Head, Office of Migration, Department of Citizenship, at the Ministry of the Presidency, Aubrey Norton. Norton assured the audience that Government was conscious of this phenomenon and remained committed to ensuring that Guyanese, including those abroad, received the appropriate incentives and the necessary support to develop and grow businesses.

The GBJ also noted, during its visit, the evident increase in international business interest in Guyana. Guyana’s impending oil future largely drives this activity. To assess the level of engagement of the citizenry in this regard, the GBJ held several brief conversations with a range of citizens, in particular, with those engaged in small businesses.  Our conversations reveal a mix of optimism and uncertainty as many citizens remain unaware of how they can tap into the oil business.  Many lack the expertise or access to expertise to develop their products and services to target inbound investors and external markets. One hairdresser opined that while Guyana’s business environment will likely receive a significant boost with oil, she doubts that ordinary citizens will reap any real socioeconomic benefits. Another citizen, a taxi driver frequented by GBJ reporter Carolyn Walcott,  is no longer plying the Stabroek Market area for passengers. He now relies exclusively on driving Exxon Mobil employees to and from one of the worksites daily for substantially more than what he received waiting for passengers daily. “Life is better for me already,” the taxi driver beamed as he boasted of making over GYD 200,000 per month using far less effort. An academic, however, was less optimistic about the future. She shared that while the country was likely to advance economically, she was concerned that allocating resources toward basic infrastructure would likely not be prioritized. In a subsequent conversation with an official within Guyana’s energy sector, they noted that such infrastructure, i.e., improved education, roads, and hospitals, are all essential components of an emerging national strategic plan. That plan, according to the official, will be a blueprint for forecasting and visioning not only for the business environment but for Guyana’s sustainable development beyond oil.

GBJ returned to NYC on Dec 17. As we were preparing this story, news broke on Friday, December 21, 2018, that Guyana’s APNU/AFC coalition government had fallen after the success of a no-confidence vote in the National Assembly. A general election is likely in ninety (90) days. This was almost two years before President David A. Granger’s constitutional term is complete.

The collapse comes less than four years after the APNU/AFC Coalition, promising a new style of inclusive politics, defeated the PPP/Civic party that had held power for almost a quarter of a century. The ruling APNU/AFC coalition lost the no-confidence vote after the switch in the allegiance of a single lawmaker, Charandass Persaud, an Indo-Guyanese MP, belonging to the junior party, The AFC,  in the coalition.

The APNU/AFC coalition had indeed been very slow in putting together a cohesive and coordinated framework to prepare the country for the first commercial production of oil, scheduled in 2020. Still, the success of the no-confidence vote has shocked all stakeholders, and it has completely rearranged the political landscape of Guyana.

This vote is likely to exacerbate the ethnic and racial insecurities that are endemic to the Guyanese socioeconomic, political, and cultural landscape. The two main political parties in Guyana, the PNC and the PPP,  have traditionally and continue to be based along racial lines: one, the PNC, drawing support from the descendants of Africans brought to Guyana by the Dutch in the 17th century, and the other, the PPP, from the descendants of the Indians brought by the British a couple of centuries later.

Guyana gained its independence from Britain in 1966. In the first three decades of independence, the Afro-Guyanese-based PNC political party controlled the government. In 1992, the Indo-Guyanese party, PPP, gained the upper hand in the country’s elections. It controlled Parliament and the presidency until it lost elections to the APNU/AFC coalition in 2015.  The PNC is the major party in the APNU/AFC coalition. This period of Indo-Guyanes rule led to widespread resentment among Afro-Guyanese, who were shut out of government and business, just as the Indo-Guyanese said they were before coming to power in 1992. Many Afro-Guyanese see this no-confidence vote as an unfair and to some extent, an underhanded attack on the Afro-Guyanese government. These feelings are being amplified because of its timing which coincides with the treatment for Non-Hodgkin Lymphoma in Cuba of  the seventy-three-year-old President Granger.

There are deeper issues here that will be explored in future contributions to the journal. How does Guyana escape its racial insecurity trap?  Evidently, both the Afro and Indo Guyanese and other communities, most notably the Amerindian community, need to be more effectively integrated into the governing apparatus. At the core, is our unchallenged but as yet unproven assumption that our political arrangement, i.e., (the British model of) parliamentary democracy, best serves developing countries in general and Guyana in particular.  The literature reveals very scant evidence of its success in multi-racial and multi-ethnic contexts.

“Most experts on divided societies and constitutional engineering agree on several points.  First, they agree that deep ethnic and other societal divisions pose a grave problem for democracy and that, ceteris paribus, it is more difficult to establish and maintain democracy in divided than homogenous societies. Second, the experts agree that the problem of ethnic and other deep divisions is greater in countries that are not yet democratic or not fully democratic than in well-established democracies.”  — Arend Lijphart[1]

[1] Lijphart, Arend.  2002.  “The Wave of Power-Sharing Democracy” in Andrew Reynolds, ed., The Architecture of Democracy.  Oxford: Oxford University Press, p. 37.

We note here that the class-based commonality that allowed Cheddi Jagan and Linden Forbes Sampson Burnham to form the PPP quickly collapsed at its first test. The same is true of the political arrangements of Fiji, Malaysia, Indonesia, etc.  The steady line of doomed third parties, essentially class-based structures, suggests that addressing ethnic insecurity is the predominant political obstacle to harmonious development. It is unlikely that political arrangements that fail to confront this dimension will succeed. We observe that Malaysia, and to a lesser extent Singapore, have explicit ethnic quotas and references in their constitution, institutional structures, and political representations arrangements.

We are reminded at this juncture of the mythical, last “grand bargain,” which was rumored to have been under very serious consideration between Dr. Cheddi Jagan and President Linden Forbes Sampson Burnham at the time of his death in August of 1985. The rumored deal was supposed to have resulted in the appointment of Dr. Jagan and others in a Government of National Unity, which would have extended for an indefinite period. It should be noted for the record that Dr. Jagan had consistently made calls for a government of National Unity.

The GBJ strongly believes that the success of the no-confidence motion and its aftermath, coupled with the emerging oil economy, has once again provided the key stakeholders with the opportunity to act boldly to seize a “grand bargain” that would see a genuine Government of National Unity preside over the emerging oil economy for the next six years. The broad outlines of the marriage of the economic, security, and environmental bonafides of the three key ethnic groups and their potential impact on Guyana’s social cohesion are clear. The GBJ believes that a movement of this type in the political sector now would provide the impetus for robust economic growth in 2019.

In closing, we are encouraged by the many appeals for calm among all parties involved in moving Guyana forward. The GBJ believes that Guyana’s national stability is paramount. We believe that political instability leads to a climate of uncertainty which undermines possibilities for business growth in Guyana. We believe that the Guyanese institutions, in particular its courts,  are strong and that they will rise to the challenge of adjudicating the matters which will come before them during this period.  We urge the leadership on both sides of the aisle to maintain a spirit of dialogue and respect for our democratic practices and the rule of law. Finally, we wish you and your families a peaceful, productive, and above all, prosperous 2019.

 

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