What is an Unexpected Danger in Guyana
Guyana's oil wealth could turn into a nightmare
And so in the end this story could also turn into a nightmare in which people and those in power diverge and do not think together about what to do with the unexpected gift. And afterwards everything is even worse than before, because the country is ravaged by a malaise called the "Dutch disease".
Whatever the outcome of this story, the only thing that is certain is that nothing will remain as it is in Guyana, which was a British colony until 1966 and was then called British Guiana. The country is framed by Venezuela on the left and the former Dutch colony of Suriname on the right.
In front it borders on the Atlantic Ocean, in the back on Brazil. Much of Guyana is covered by rainforest. The country last made global headlines in 1978. At the time, a cult leader named Jim Jones ordered his followers who had settled in the jungles of Guyana to commit collective suicide. 923 people drank lemonade mixed with potassium cyanide, creepy images of corpses in colorful clothes surrounded by lush greens went around the world
Lots of problems and lots of oil
Even today, Guyana is known more for its problems than its successes. It has the highest suicide rate in the world, the highest maternal mortality in South America, an unparalleled brain drain and is sometimes listed as the second or third poorest country in South America. Per capita, the Guyanese earn about as much as the people of Albania. Two fifths of the population have an average of less than the equivalent of 4.70 euros a day to live on.
That story began five years ago. In 2015, the US oil giant Exxon Mobil announced that it had found a huge oil field around 200 kilometers off the coast of Guyana. It was one of the greatest finds in recent years. In total it is probably at least 5.5 billion barrels.
Perhaps eight billion barrels lie deep under the ocean floor. This catapulted the Caribbean country into one of the 20 countries with the highest proven oil reserves in the world and would even be ahead of Norway.
Shortly before Christmas, exactly on December 20th, Exxon Mobil pumped oil to the surface for the first time in a consortium with the Chinese state-owned China National Offshore Oil Corporation (CNOOC).
On January 20, the first tanker brought the first million barrels of the high-quality light sweet crude oil, 159 liters each, to Houston, Texas, the next oil tanker followed in February, then Corona came. But in the years to come, thousands more shiploads of the black gold will follow and take Guyana to other dimensions.
By the end of the year alone, the Stabroek Block oil field, which will be the first to be developed, is expected to deliver 120,000 barrels per day, and according to forecasts by the International Monetary Fund, production will increase to 424,000 barrels by 2025.
Natural resource mismanagement
By the end of the decade, Guyana will very likely produce 1.2 million barrels per day, according to the Norwegian analysis firm Rystad Energy. That would mean that the Caribbean country, slightly larger than Belarus, would overtake the oil giant Venezuela and become a significant player in the global energy market.
Guyana's President David Granger rapturously declared December 20 “National Oil Day,” the new informal national holiday, and launched the campaign for his re-election in January.
Oil production would bring wealth to the country and a better life for the people, he promised: "Every Guyan will benefit from oil production, and the wealth created by it will go to those who need it most." year old Granger himself set a bad example. But more on that later.
The mismanagement of natural resources, especially sugar and wood, has accompanied the country practically since its existence. Why should that get better now? Nobody knows a good answer to that. Least of all the politicians. Neither party has put forward a plan to use the new wealth.
The International Monetary Fund (IMF) predicts that Guyana's economy will grow by around 85 percent this year alone. By 2024, the country's economic power is expected to almost quadruple from currently around four billion to 15 billion dollars per year. Guyana could soon produce far more than one barrel per inhabitant and thus leave the Gulf States behind in terms of per capita production.
Per capita income would then rise from a little over $ 5,000 to almost $ 20,000 - that would put Guyana just behind Saudi Arabia. And if the bonanza continues like this, the Caribbean country could compete with even more prosperous states.
Dispute over the election result
"Oil wealth can transform us once and for all into a country like Singapore," says Winston Jordan, Guyana's finance minister, whoever is allowed to manage this wealth will probably rule the country for decades. "The presidential election will be the mother of all elections."
Jordan spoke these wise words in late February, just before the March 2nd vote. It's been about five months since the election, but there is still no new president because the alleged loser, incumbent Granger, refuses to accept the defeat. Accordingly, he and his APNU party lost the election and a recount, and various court rulings see the PPP and its Indian-born candidate Mohamed Irfaan Ali as the winner. Even the “Caribbean Court of Justice”, the highest legal instance of the Caribbean community Caricom, confirmed the outcome of the election. As a result, US Secretary of State Mike Pompeo Granger called in late July to “respect the results of the democratic elections and make way”. Otherwise Washington would "withdraw visas from those who undermined democracy in Guyana".
After that everything happened very quickly. At the beginning of August, the 40-year-old opposition candidate Irfaan Ali was sworn in as the new president of the South American country. Shortly before, the state election commission had cleared the way for it.
Since the oil discovery, too many people have had the dollar signs in their eyes, warning consumer advocates, corruption experts and even politicians in Guyana. The dispute over the election result is the best example of this.
Oil deposits - curse or blessing?
To make matters worse, politics in the country is made along the lines of distinct ethnic affiliation. 30 percent of the population are Afro-Guyan, a little more than 40 percent are descendants of Indian contract workers who were brought into the country by the British.
And so far, every government has only ever made policy for its own ethnic group, experts criticize. With the corresponding consequence. In Guyana, “nepotism has been unleashed”, criticizes Troy Thomas, director of the Transparency International office in Guyana's capital, Georgetown.
He was "very concerned" that the oil curse is making the country's situation worse than it is. Experience shows that more money tends to drive people apart rather than bring them together. The farce about the presidential election is a harbinger of this.
And we know that sudden prosperity can simply overwhelm people and those in power. "Dutch Disease" is the keyword here. The sale of the expensive oil increases export revenues and with it the price of the domestic currency.
That in turn makes the exports of traditional goods - in the case of Guyana rice, sugar, bauxite - more expensive. The economy becomes almost entirely dependent on oil. But if the sources dry up or the world market price falls, as happened this summer, there are suddenly no alternatives.
Finance Minister Jordan knows all this and therefore warns: "If we want to become like Singapore, then we have to be as efficient." "Our bureaucracy is not even able to properly manage the little money we have."
More: Read here why Cuba is both a loser and a winner in the corona pandemic.
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