Guyana, home to just 750,000 people, is about to leap from one of the poorest to one of the richest countries in the world. The financial predators are circling, led by the Chinese. Guyana‘s inexperience, incompetence and lack of Western interest will hand the Chinese a valuable prey.
Oil discoveries off the coast of Guyana are on course to produce about 1 million barrels per day of oil for 30 years. If oil fetches just $50 per barrel, this equates to nearly $500 billion. Guyana’s share of this will be approximately $300 billion; the other $200 billion will go to the Exxon-controlled consortium. The amounts are conservative estimates: New oil discoveries keep coming. Exxon and its partners, Hess and Nexen (the latter owned by the Chinese), landed a very sweet deal.
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Guyanese outrage about how its government granted such a stupendously generous package is vocal and growing. The reason is no more than incompetence and sharp Exxon negotiators. But Guyana’s share is still gigantic and could transform the country.
Guyana’s future is most likely either along the Equatorial Guinea path — where a small elite takes all the oil money and the majority remain in poverty — or the Norwegian model. Under the latter, the oil money is invested wisely so that all citizens become wealthy. The majority of Guyanese simply do not understand the consequences of the wall of money about to hit the country — nor does the government, whose development program is muddled, myopic and concerned only with short-term projects.
No leader has outlined a vision to guide this remarkable country out of poverty to a golden future. The government has not even produced a practical national development plan, only a list of well-meaning short-term objectives. Apart from President David Granger, who is a humble and honest ascetic, the rest of his government is hopelessly out of its depth. Granger is about to face a decisive election which, despite a potentially rosy future, he will likely lose to the notoriously corrupt opposition party. As a result, the Equatorial Guinea model is the likely outcome, with a few Guyanese becoming immensely wealthy, and the majority seeing little change.
A variety of carpet baggers and more or less (usually less) respectable merchants have turned up from Nigeria and other parts of West Africa exploit the opportunity. But above all, the Chinese have arrived in force, and dealing with a self-selected elite is just their style. They have a huge embassy to cultivate the locals, and spy out deals and projects to build. Already Chinese contractors have refurbished the main airport. The Chinese Foreign Minister Wang Yi has visited to sign up Guyana to the Belt and Road Initiative, and there are many mega projects in his sights.
These include the first paved road from Boa Vista in the north east of Brazil to the Guyanese coast, a new deep-water port and industrial zone powered by gas piped from off shore. Guyana needs a new capital on higher ground. Georgetown, right on the coast, is about a meter below sea level, and at high tide the sea pours over the inadequate sea wall. The city is one big storm away from disaster, and rising sea levels will anyway inundate the city in a few years.
What’s more, 90% of the country’s population lives on a coastal strip nearly all of which is below sea level at high tide. The Chinese are ready and willing to relocate the capital and rebuild the coastal defenses. They are eager to provide the finance, secured against future oil revenue and to lock in Guyana for the long term. They will of course import tens of thousands of Chinese laborers to do the work. As usual in such situations, they will never leave.
Guyana’s former colonial master, Great Britain, has a tiny embassy, and no senior UK ministers have visited in decades. The US is slightly more alert, though its embassy is full of Drug Enforcement Administration agents and is more interested in the war on drugs and the conflict with Venezuela. The US is going to miss out on the development bonanza and lose Guyana to the Chinese, and Western business doesn’t want to invest in a country plagued by government ineptitude, petty corruption and almost total lack of local capacity.
Apart from Exxon and Hess, who sit safely off shore and ship their oil to foreign markets, Western businesses seem set to sit this opportunity out. The Chinese are taking a longer, multi-generational view. They will invest in this lucrative market, settle their nationals, rebuild the infrastructure — and Guyana will become another Chinese satellite.
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.