• M74 Editorial Team

Guyana’s Oil: Catalyst for Success or Accelerant of Civil Unrest?

By Omari Joseph

The 2020 elections in Guyana drew the attention of the world. From potential investors to foreign governments, all eyes were on the lesser-known South American nation. The anticipation of outside observers almost rivalled that of the Guyanese people, who were stirred into a sea of anxiety by a historic no-confidence vote on December 21, 2018. On that day, a vote was made following a no-confidence motion against the ‘A Partnership for National Unity’ (APNU+AFC, or APNU) government. Thirty-three members of the 65-member National Assembly voted ‘yes’ to the no-confidence motion, which forced the resignation of the Cabinet and the scheduling of general elections for March 2, 2020.

The no-confidence motion was preceded by Exxon Mobil's historic discovery of oil in May 2015 at the Liza-1 exploration well, off the coast of Guyana. Later that year, the Liza-2 appraisal well confirmed 800 million to 1.4 billion barrels of oil equivalent. At the time, production was estimated to begin in 2020—which it did.

In 2019, after Guyana announced the second-most oil discoveries in the world after Russia, observers began to postulate on the future of Guyana, given the massive economic potential of these discoveries juxtaposed with the relatively small population of the country. Each further discovery only brought more attention to Guyana and its 2020 election, which was going to decide who would manage Guyana’s future as an oil-producing nation.

Leading up to the election, the two main parties selected their presidential candidates and began to present their respective platforms to the public. APNU presented their manifesto as an addendum to their plans that were already in progress. These plans included increasing access to education for poor and hinterland students, investing in sustainable energy production, and economic diversification.

To ensure the ‘good life,’ APNU promised to implement various social programmes funded by the future proceeds of the country’s oil industry. These included science, technology, engineering, and mathematics (STEM) scholarships for students and ‘start-up packages’ for young people who wished to begin farming. APNU also promised to optimise the sugar industry to preserve jobs and reduce wastage by focusing on local supply chains and exports to the Caribbean, as well as turning by-products into biofuel. Economic diversification was another prominent feature in the APNU manifesto, which proposed investment strategies focused on agri-business, tourism, mining, and other sectors with the capacity to improve value-adding. This manifesto was set to be fulfilled by Brigadier David Granger and Moses Nagamootoo, who were seeking re-election as the President and Prime Minister, respectively.

The then-opposition ‘People’s Progressive Party/Civic’ (PPP/C) selected Dr. Irfaan Ali as their presidential candidate and Brigadier Mark Phillips as their prime ministerial candidate. Their manifesto, dubbed ‘Our Plan for Prosperity,’ was headlined by promises to create 50,000 new jobs and ‘rescue’ the productive sector (export industries such as mining, logging, and sugar). The PPP/C pledged to re-open sugar estates and re-energize the economies in sugar communities. Their campaign promises were carried by a message of ‘undoing the damage done’ by APNU while in office. PPP/C campaign rhetoric made it clear that they believed that the closing of sugar estates in prior years had damaged the economy. They also denounced 200 new tax measures that had been imposed under the prior government as ‘harmful to economic growth.’

Both parties did a rather lacklustre job of marketing the personalities of their candidates. Dr. Ali was never truly the main event or most important speaker at PPP/C rallies or other party events. He was often overshadowed by the more prominent personality, Dr. Bharrat Jagdeo, the former President and Permanent Secretary of the party at the time. There was little shine left for prime ministerial candidate, Mark Phillips, as his rally appearances could be best described as ‘cameos.’ Regardless, the PPP/C effectively campaigned on multiple social media platforms by harnessing text, infographic, and video content.

For APNU, their campaign consistently appeared to be a step or two behind that of the opposition. During their time in office, there was a noticeable lack of press conferences by the Office of the President. Nevertheless, the public (and their support) was constantly reassured by APNU spokespeople that matters were proceeding ‘according to plan.’ In the beginning of 2020, then-President David Granger headlined a lively campaign launch, at which he reiterated his party’s commitment to continue building the ‘good life’ for Guyanese. At this event, it was clear that APNU felt confident that they would be re-elected. Perhaps for this reason, in the months that followed, APNU’s social media efforts paled in comparison to those of the PPP/C. As a result, some APNU supporters felt like they were being ‘left in the dark.’

The failure of both parties in marketing their candidates was further highlighted by the tactless remarks made by officials on both sides. At times, it seemed that the two campaigns had less to do with their plans for Guyana and more to do with why their opponents were the ‘worst’ people to trust with the governance of the country. Race also played a role in the campaigns of the two dominant parties. Both parties sought to label those that didn’t support or vote along traditional racial lines as ‘traitors, tokens, or sellouts.’ This racial element first reared its ugly head during the split of the People’s Progressive Party in the 1950s into an Indo-Guyanese faction and an Afro-Guyanese faction. The former faction became the modern PPP/C, while the latter faction became the People’s National Congress/Reform (PNC/R), which is the leading party in the APNU coalition. After several elections, the racial element in Guyanese politics has regrettably become a staple that many voters appear apathetic to.

Leading up to this year’s election, there were disputes over the credibility of the voters list. Since the 2015 election, the revised voters list saw an increase of around 90,000 eligible voters. Some described this updated list as ‘inflated,’ while others considered it to be an accurate representation of the number of eligible voters.

The 2020 elections were held on March 2 with the revised voters list, but the issues did not end there. After voting day, the tabulation of votes dragged on for over a week. A collective sense of anxiety enveloped the country, as the patience of the people wore thin. That anxiety turned to agitation as both parties prematurely claimed victory, although the final count of the deciding votes in Region 4 remained outstanding. It wasn’t long until Returning Officer Clairmont Mingo released the results of Region 4, which would have made APNU the victors. The opposition promptly filed an injunction to prevent the official declaration of the election outcome, because they deemed the entire process fraudulent. Tensions ran high, and violent protests (which left one dead and many injured) erupted along the coast of Guyana, particularly in known PPP/C strongholds.

In response to the opposition’s injunction, the High Court ordered a partial recount, which dragged on for several more days. When the recount was completed, it showed a victory for the PPP/C. This result was disputed by APNU and taken to the High Court, where the Chief Justice ruled the recount valid, which meant that it had to be used to declare a winner. This ruling was then challenged by APNU at the Court of Appeal, which threw out the Chief Justice’s decision. The case ultimately reached the Caribbean Court of Justice, which unanimously ruled that the initial ruling of the Chief Justice in favor of the PPP/C was in fact valid.

On August 2, after 5 months of political disputes, civil unrest, and various debates surrounding the constitution, Dr. Ali was sworn in as President, and the PPP/C began to fill their Cabinet positions. Dr. Jagdeo was named Vice-President and put in charge of the government transition team. The transition started soon after with various political appointees and other public servants from the prior administration being fired. Some characterise this as a ‘witch hunt,’ while others consider it a necessary pruning of political plants.

President Ali reaffirmed his commitment to make the people proud by leading an economic recovery of Guyana. He also sought to reassure them that his government would prudently use the proceeds from oil production for the betterment of all Guyanese. The new President’s statements after being sworn in are encouraging, and were certainly a bright way to begin his time in office. However, those statements are being received very differently in communities across the nation.

As discussed earlier, politics in Guyana have long been divided along racial lines, and prominent political figures have always exploited and exacerbated this division through overt and subtle racial rhetoric and by pandering to their respective interest groups. As a consequence, the results of the 2020 elections have left one segment of the population elated and the other disgruntled. For the sake of generality, the ‘happy group’ is assumed to be the predominantly Indo-Guyanese supporters of the PPP/C. In contrast, the ‘disappointed group’ is assumed to be the predominantly Afro-Guyanese supporters of APNU. This generalization can be dangerously reductive, as there is much nuance in discussions concerning political affiliation in Guyana.

Regardless, it is impossible to ignore the fact that one large group of people feel disenfranchised or worried that they will be exploited under the new regime, while another believes that they are being given the power to ‘undo’ the suppression they feel they had suffered under the prior regime. These sentiments represent long unresolved matters of distrust and even hate among segments of the Guyanese population. Although racial tensions had cooled slightly since President Ali’s inauguration, they reignited over the past several days after two Afro-Guyanese teenagers were found murdered and two Indo-Guyanese men were killed in reprisal. All four homicides are still being investigated.

I firmly believe that this entire election process has destroyed what can only be described as a pretentious cloak of unity among the Guyanese people. It has brought to the forefront a political and cultural conversation that needs to be had sooner rather than later. Issues have been presented that require decisive resolutions instead of the circular arguments and empty platitudes that have been fed to the Guyanese people for decades. I know that my university colleagues share similar opinions. In our discussions during the chaos, we often lamented the political climate and the lack of intellectual input when charting the future of Guyana. We have seen these issues throughout our teenage and adult lives culminate in the events surrounding this year’s election. My colleagues all had harsh criticisms of the conduct of both political parties, especially the leading figures on both sides. I think that these criticisms are borne of a collective sense of disappointment shared among the youth and cultivated by a constant repetition of weak government performance.

Now that oil extraction has begun, the implications of Guyana’s election results are of increased interest to potential foreign investors. Should these investors share in the various concerns of the Guyanese population? The simple answer is no. Prospective investors’ more immediate worry should be that the World Bank ranks Guyana as 134 out of 190 when it comes to ‘ease of doing business,’ 170 in ‘getting electricity,’ 167 in dealing with construction permits, and 122 in terms of paying taxes.

Notwithstanding the obstacles stated above, many foreign economists consider Guyana to be an attractive option for investment, especially following the country’s commencement of oil production this year. For international businesses, the underdevelopment of Guyana in several industries (such as agro-processing, telecommunications, and manufacturing) can be seen as unbroken ground. The new government has consistently expressed interest in welcoming foreign investment in these and other sectors, which may be one of the keys to the ‘economic recovery’ that President Ali keeps talking about.

Oil production has already brought opportunities within the industry itself and for supporting services. Earlier this year, while speaking with members of Guyana’s Department of Public Information, the Political and Economic Counsellor at the United States (US) Embassy in Georgetown, Alexandra King-Pile, noted that the Embassy had received expressions of interest in investing in Guyana from many US companies across several sectors (including construction, logistics, food, hospitality, and transportation).

In my opinion, the wealth from Guyana’s oil production will ‘trickle down’ to average citizens. However, this process will not occur immediately in the ways that many imagine. For starters, we must recognise that individuals employed within the oil industry will be the first to directly benefit from this wealth. Those employed in adjacent and complementary industries (which provide products and services to oil companies) will also see direct benefits. Citizens may also benefit directly if the new government decides to deliver universal disbursements from the oil proceeds (akin to what the Permanent Fund of Alaska in the US does). Whether that will happen, though, remains to be seen. In a favourable scenario, the majority of citizens will benefit indirectly, if the success of the oil industry encourages the growth of non-oil sectors and related infrastructure via increases in both domestic and foreign investment.

The Chief Economist of the American Petroleum Institute, Dr. Dean Foreman, shares a similar opinion. In a comment solicited by Newsroom Guyana, Dr. Foreman spoke about the ‘new investment, employment, and tax revenues’ that oil extraction will create and how the ‘follow-on economic activities derived from having an oil industry in the country will be new and therefore incremental to the economy.’ Accordingly, the ongoing influx of foreigners working in and adjacent to the oil industry represents an untapped market for imports. In the longer term, a rise in disposable incomes among Guyanese people will also spur demands for new goods and services. As a result, present and future opportunities abound for foreign and local businesses to profit from evolving consumer preferences.

In my view, given the available information, foreign entities should view Guyana as an attractive option for investment. While there are risks, the greatest reward lies in the opportunity to capitalise on a unique market with great potential that’s still in the early development stages.

Omari Joseph is an intern at M74 from Georgetown, Guyana. He is an undergraduate student of International Tourism Management at the University of the West Indies in Trinidad. Omari has written for the CAF Development Bank of Latin America, the Eric Williams Memorial Collection, and the Explore Guyana Magazine.

The views expressed above are those of the author and do not reflect the official position of the M74 Group, which remains neutral on all matters. Publishers assume no liability for content.