A Critical Juncture for the World's Newest Energy Superpower

 

Guyana is oft forgotten. As a middling Caribbean state notable for being the only English speaking nation in South America, as well as one of the poorest countries in the hemisphere, Guyana has rarely received much in the way of global attention. That has rapidly changed. US Secretary of State Pompeo paid the first official US visit to the nation of just under 800,000 people last month. Secretary Pompeo was not there to marvel at the world-class wildlife and nature (which the editorial staff at The Thiébault Blog has long wanted to experience) but was presumably much more preoccupied with Guyana’s 8 billion+ barrels of recently discovered oil reserves (not to mention Guyana’s potential as a bulwark against neighbouring Venezuela).

There is much in to be optimistic about for the future of Guyana. Since 2015, when a consortium led by ExxonMobil discovered that aforementioned 8 billion barrels of oil, the groundwork was laid for Guyana to reach an oil output of 1.1 million barrels by 2030, rivaling the per capita output of the Gulf states. This is the kind of boon that any lower-income country would dream of and holds the promise of lifting hundreds of thousands of people out of poverty, should it not be squandered. The prospect of it being squandered is unfortunately cause for grave concern.

Guyana’s history since Colonialism has been frequently marred by ethnic ructions and violence. These came to a head in the early 2000s but have thankfully been abated in recent history. The discovery of oil and a hotly contested election have however led to some recent spasms of ethnically tinged violence. The two predominant political forces in Guyana see their support largely drawn on ethnic lines. PPP/Civic, which won this year’s election, is dominant among Indo-Guyanese while the outgoing APNU/AFC is generally the Afro-Guyanese party of choice. The election has not been without contention, it took months before the election was finally resolved with a curiously partisan Chief Electoral Officer, election irregularities and suspicious arrests (especially of said Chief Electoral Officer in recent days on complaints of “private citizens”). That being said, the Caribbean Community, along with the UK and US intervened and a recount was conducted, which helped ensure the rightful victor took the reigns and a peaceful handover of power occurred.

The future is fraught however, in recent days three teenagers have been killed in what seems to be ethnically motivated violence. Isaiah and Joel Henry were two afro-Guyanese brothers who went coconut picking and were brutally hacked to death, allegedly by an Indo-Guyanese farmer. In retaliation, Afro-Guyanese protesters ambushed a young Indo-Guyanese man Haresh Singh and beat him to death. This ethnic acrimony, made worse by a hotly contested election and the potential for grand oil wealth is being further inflamed by political leadership. In relation to investigations into this recent violence the Guyana Human Rights Association stated that “the prevailing poisonous political atmosphere has penetrated the society to the point where public trust in an impartial investigation is virtually non-existent.”

So what is the way forward? Guyana does have some of the requisite institutions, violence has largely been tempered the past couple of decades because grievances were dealt with in court instead of through violent clashes. The constitution provides for an “Ethnic Relations Commission” whose express purpose is to promote ethnic harmony. The Caribbean Community also acted admirably in effectively intervening and pushing the smooth transition of power. Still, political leadership needs to do much more to dampen ethnic strife and some institutions need bolstering. Newly elected President Ali has stated that he rules for all Guyanese, much more needs to be done to assuage concerns that this may not be the case.

In addition to the ethnic component, another key election issue concerned the deal inked with ExxonMobil for the rights to drill in the offshore reserves. There are very legitimate concerns that the outgoing government was taken advantage of and negotiated a deal which sees far too little of the money from oil going into government coffers. Secretary Pompeo’s visit seems like it was partially to ensure that Guyana would not try to get any more out of the generous deal for ExxonMobil. While it is true that Guyana needs to demonstrate an investment friendly climate, getting fleeced is not a precondition to this. US involvement has not always been an unadulterated net positive, stemming from CIA meddling in the country’s independence movement in the 1960s. Secretary Pompeo’s lobbying on behalf of ExxonMobil does not appear particularly helpful.

Guyana’s future holds immense promise, its people deserve to see this potential attained. There is the real possibility for the development of a wealthy and harmonious nation with many people lifted out of poverty, let’s hope these benefits are fully realized in the world’s newest emerging energy superpower.

Learning About Mining from Nauru

Nauru is rarely top of mind for most people. If it is thought of at all it is most likely as being the most obese nation on Earth, or perhaps in a slightly more positive light as being the world's smallest republic (though not country, that distinction rests with Vatican City). This blog however aims to take a different tack and glean lessons that are broadly applicable from phosphate mining in Nauru. Phosphate is a critical component in the global food supply. It’s primary use is in fertilizer, but is also important in animal feed supplements. Though it plays a pivotal role in our food supply, the process of mining phosphate can be devastating to the land, leaving it completely unusable.

Many countries are resource dependant and the ills of this are well-known. What Nauru provides is perhaps the most lucid example of the benefits and ramifications of resource dependency. Nauru puts into stark relief the huge benefits mining can bring, from when the tiny island nation became fabulously wealthy, as well as the ramifications from environmental catastrophe. To fully understand why this is so, let's look into Nauru's tumultuous relationship with Phosphate.

The benefits of phosphate mining came quickly, and Nauru was in fact the wealthiest nation on Earth for a time. Though these benefits did disproportionately benefit colonial powers, even after gaining independence, significant wealth was derived for Nauruans from Phosphate. In the peak year of 1975, this amounted to AUD$2.5 Billion in today’s dollars, more than enough for generations of the 10,000 odd inhabitants to survive on. Tragically however, much of this was squandered, perhaps most notoriously in a musical that premiered in London on Leonardo da Vinci having a love affair with the Mona Lisa. This musical was helpfully produced by one of the financial advisors to the Nauruan government, who wanted to get into theatre. What was left when the money was gone was a destitute nation. 80% of its landmass was reduced to little more than hulking bleach-white towers. The land was not only wholly infertile, but the detritus prevents the possibility of any kind of building. Promises by companies for reclamation never materialized. In the aftermath, Nauru's economy has turned to the rather sordid business of money laundering and detention camps. The former booming in the 90s as a favourite of the Russian Mafia, while the latter has burgeoned since the 2000s, with Australia currently providing at least 2/3 of Nauru’s revenue for holding would be asylum seekers in the notorious camps on the island.

This is meant to be far more than a fascinating history lesson of Nauru. What Nauru provides is something that is far too often missing from discussions around mining, a stark example of both the benefits and pitfalls. Resource extraction deserves a robust policy response that takes advantage in the immediate-term of a resource, but that purposively plans for the future. Governments often pay lip service to this idea, but the issue tends to lead to entrenchment on the extremes. With environmentalists advocating for no resource utilization and mining advocates wanting to dig without abandon. Pro-mining nearly always wins out, but far too many countries lack a comprehensive timeline for economic diversification. Policy needs to ensure mining windfalls are appropriately invested and that citizens receive tangible benefits. Additionally, prudent environmental stewardship of mining, including enforceable assurances of clean-up and reclamation of mines is paramount. Nauru provides a microcosm which demonstrates the course countries around the globe are destined for with continued complacency during the good times of a resource boom. A pertinent illustration of the need for resource-dependant economies to be awoken from their torpid stupor, and proactively manage their resources. Its lessons should be heeded.