OPED – A secret weapon on Venezuelan oil: Guyana

By David Wade and Andrew Holland
EXAMINER-WASHINGTON-TODAY, our hemisphere is roiled by mass migration and the ongoing meltdown of Venezuela. But one hidden opportunity could be a secret weapon to offset President Nicolas Maduro’s Venezuelan nightmare and create an oasis of stability.
Guyana’s commitment to sustainable energy security and the rule of law could lead to a long-awaited economic transformation and a Region less reliant on oil from an ever-more volatile Venezuela.

In the next decade, Guyana will become one of the world’s largest per capita oil producers. Exxon Mobil’s successive discoveries collectively amount to the world’s largest offshore crude oil finds since 2015: almost four billion barrels of recoverable oil; Guyana could be producing up to 750,000 barrels per day by the late 2020s. These resources have the potential to replace Venezuelan crude in the regional market and replace Caracas’ regional petro-politics regime with a much more stable and steadier supplier of the hemispheric market.

Resource booms have not always benefited small, poor countries. The “Resource Curse” can result in failed governments, macroeconomic stagnation, and endemic corruption. Like many small, developing post-colonial nations, Guyana’s economic and political development has not always been smooth. But today, energy development could mark a new chapter.

Chastened by the cautionary tale of next-door Venezuela, Guyana is taking steps to chart a new path. As part of its preparations for the influx of capital, Guyana is actively engaging with resource-management experts from the World Bank, the International Monetary Fund, and the Commonwealth organisation to build a sovereign wealth fund and transparency mechanism to manage new oil revenues. Guyana has also proposed an ambitious Green State Development Strategy with the objective “to reorient and diversify Guyana’s economy.” They intend to use their incoming resources to fund a clean, resilient economy. With an ambitious time frame of only seven years, they aspire to move to 100 percent renewable energy by 2025.

Guyana’s economic boom, if directed properly, could provide revenues to solve long-standing security problems and build a model for the Region. Some of the security challenges can be addressed as they have been elsewhere in the hemisphere. Guyana is a common transit country for cocaine headed from Colombia and Venezuela to the United States, Canada, and Europe. In the last decade, working with the U.S. to combat drug smuggling, the government passed legislation to address money laundering, terrorist financing, and extradition. More can be done as oil revenues increase.

Guyana faces external threats as well. Far from being immune from regional strife, it has been a target of its difficult neighbours. Despite Guyana’s grudging participation in Caracas’ PetroCaribe, in October 2013, the Venezuelan navy detained the crew of a vessel operating with a U.S.-owned partner in Guyana’s Exclusive Economic Zone. Once Guyana’s oil find was announced in 2015, Venezuela quickly dumped Guyana from PetroCaribe and, within weeks, both Suriname and Venezuela revived long-dormant claims to Guyana’s territory.

That’s right—Venezuela’s power is declining amid its economic and humanitarian crises, but Maduro is still trying to bully smaller neighbours, even threatening military action over border disputes. The United States has a role to play: it can support the rule of law, the sanctity of borders, and the proper application of the U.N. Law of the Sea. Should the U.S. seek to increase pressure on Venezuela, surely support for Guyana would be an appropriate measure.

The Mike Pompeo State Department hinted in that direction on Guyana’s Independence Day, wishing “Peace and prosperity … across the entire ‘Land of Many Waters’” — a veiled signal of support against Venezuela’s territorial claims. As Guyana’s spending power climbs, the purchase of modern naval vessels would add some hard power symbols to the legal dispute.

Guyana has a chance to change its own future and tilt the regional energy picture towards stability and predictability. The United States, even in an era of retrenchment, needs to find the bandwidth to help them succeed, so that we all benefit. (David Wade was Secretary of State, John Kerry’s chief of staff and now writes frequently on foreign policy issues. Andrew Holland, a Republican, is CEO of the American Security Project.)

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