Venezuela Moves on Guyana: Boligarchs Among the Sharks
The Monetary Wars, Part 20
Other articles in the Monetary Wars series can be found here. Find more discussion at the RTE Locals community.
The new conflict in South America may tell us something about the evolution of the global(ist) economic paradigm. How much weight do historical national boundaries and names really hold? Are most governments simply temporary peace zones organized by billionaires able to extract enough wealth to afford security costs?
Might Makes Boundaries
Oil-backed socialism sure looks a lot like the dark side of traditional colonialism sometimes?
Ideological labeling jokes aside, I'd like to dig a little deeper into this story. It certainly starts with oil, but it doesn't end there.
Over the past few years, massive new oil reserves were found in and offshore of the tiny nation of Guyana. The population of 800,000 is not used to such a "gold rush".
And while the projects have created jobs, it’s rare for Guyanese to work directly in the oil industry. The work to dig deep into the ocean floor is highly technical, and the country doesn’t offer such training.
Experts worry that Guyana lacks the expertise and legal and regulatory framework to handle the influx of wealth. They say it could weaken democratic institutions and lead the country on a path like that of neighboring Venezuela, a petrostate that plunged into political and economic chaos.
“Guyana’s political instability raises concerns that the country is unprepared for its newfound wealth without a plan to manage the new revenue and equitably disburse the financial benefits,” according to a USAID report that acknowledged the country’s deep ethnic rivalries.
A consortium led by ExxonMobil discovered the first major oil deposits in May 2015 more than 100 miles (190 kilometers) off Guyana, one of the poorest countries in South America despite its large reserves of gold, diamond and bauxite. More than 40% of the population lived on less than $5.50 a day when production began in December 2019, with some 380,000 barrels a day expected to soar to 1.2 million by 2027.
You might wonder if the global "oiligarchs" would rather extend the framework of Venezuelan governance and agreement, seasoned for the job, over Guyanan oil. If the goal is to siphon and launder profits, why bake a whole new cake?
The events of the past few years have me looking for hidden relationships and motives behind geopolitical power moves. And while I am certain there is still plenty of information invisible to me, I got educated about the economics of Guyana by a personal friend who has been busy raising capital for South America's tiny English-speaking nation's growing industries. In fact, I was offered the opportunity to invest in Guyana's rapidly growing economy—the fastest growing in the world over the past three years. Had I not been ill so much earlier this year, and building a small side project/company, I likely would have made a modest investment. From Statista,
Judging by the headlines, you might think this eye-popping economic growth in South America simply has to do with oil. However, there are two less recognized industries fueling Guyana's economic boom: gold and timber.
Right about now, you might fully get why gold is of increasing importance. The gold market is once again pushing toward new highs as central banks and other institutions around the world scramble for more of it—particularly with the potential for BRICS breakaway under discussion (I think that will fail, but that's another story). What interests me more personally is when the paper gold scam finally collapses. That's when the value of gold will skyrocket, no matter the state of BRICS or the larger global banking landscape.
The more surprising industrial boom in Guyana is the timber industry. During the plandemonium, supply chains for building materials such as wood began to stall. Personally, I saw enough to know that supply was often intentionally held up in supply chains, pushing prices up. And in a world of suddenly scarce supply, it's hard to blame suppliers for ultra-conservative holding—particularly as Biden was adding taxes to Canadian suppliers…to keep Americans paying more?!
But the timber supply market in Guyana grew rapidly less because of demand in the West than in Europe. This is due to war in Ukraine. The war affected timber moving westward into Europe both from Ukraine and Russia also.
Clever traders can sidestep a few obstacles to get resources from Point A to Point B. But that's not enough to keep price equilibria from bumping upward without new supply access.
Enter Guyana
While I haven't traveled to Guyana to verify any of this, Guyana is apparently chock full of trees. Big trees. Good for building with, and any new supply at all would help struggling Europe.
I know what most people are thinking at this point: It would suck to cut down all that rainforest.
Yes. Yes, it would.
There are only a handful of places on Earth where you might get to see some fish eat the massive python that just swallowed the alligator that itself died with a hoofed animal in its jowls. It would be a shame to ruin that.
Fortunately, the timber is not coming from clearcutting operations with the intent to sell off all the wood. This will take a bit of explaining.
Earlier this year when I talked to a couple of entrepreneurs working in Guyana, they explained to me how the expansion of the timber industry was largely just a horizontal elevation of the gold mining already taking place there. In any one particular area, some trees come down, and gold is dredged from swampy soil (the gold harvest in Guyana is unique among gold operations around the world). But the company doing this has a strict agreement with the Guyana government, and harvests somewhere around 1 in 600 trees per acre of forest that they own per year. It sounded like one of the more environmentally friendly and sustainable resource harvesting operations in the world.
And if the mining is already going on, it's best to make the timber useful.
I'm told that even where mining is finished, and there are small patches of land without trees, these are often turned into farming groves for nearby native villages. That way Guyana remains one of the most pristine countries on the planet. Mostly, these operations take place without the larger continent, or even the population of Guyana, really noticing. The tiny population of Guyana remains largely centered in a single port city, Georgetown, while the beautiful land remains almost entirely unspoiled.
And it's big money—enough to fuel the world's largest economic boom this decade.
Also enough to attract the attention of the "Bolivarchs", who have a wider network of banking support than you might imagine given the surface story of Venezuela's conflict with the global capitalist markets. And it's far less certain that Venezuelan business titans will maintain either the high level of respect for the land protected by the Guyanan government (imperfect, but quite remarkable), or maintain the peaceful equilibrium. Who says they'll stop with the disputed land of Esequiba? Why not gobble up the convenient port at Georgetown if it cannot protect its boundaries?
Testing the Global Security Paradigm
With talk of Klaus Schwab and Bill Gates taking over the world (or being the clown-banners of the difficult-to-fully-decipher "New World Order"), there are real questions about how global powers are shifting. The Bretton Woods era is behind us, but the U.S. military, and the Navy in particular, still maintains peace around the larger portion of global trade routes—particularly in the Western hemisphere. This moment may test the degree to which the U.S. government simply bears the costs of security, however.
Secretary of State Antony Blinken signaled support for Guyana, and the U.S. is running military drills with Guyanan forces.
The dispute over the Esequiba region did not begin yesterday, though most of us were not aware of it since those national borders seemed settled in the late nineteenth century. But what's to stop the Venezuelan Boligarchs from moving in on Esequiba?
If the economic interests dictate the dispute, there is the draw of oil on one side. The value of that oil will only increase in the upcoming years. And there are plenty of interests happy to profit from development of oil fields.
On the other side we have the general interests of peace of South America, which are worth something, but less than politicians lie to us about. However, the gold and timber interests create a new set of allies for Guyana, and these include not simply Europe, but also India. Due to Guyana's history as an English outpost, around 40% of Guyanans are of Indian descent. And much as with Africa, Guyana has profited from the immigration of an increasingly large and talented pool of engineers produced at Indian universities. If oil supply is at stake in an increasingly tumultuous world, India would be, at the least, happy to increase its share of the oil and refining economies. This would pit Boligarchs against Baligarchs.
Still, the larger interest in backing Guyana may still come from the U.S. For around a decade, Guyana has flirted with the BRICS block. If the tiny, oil-rich nation comes to depend on U.S. security, that would certainly help the dollar combat all comers. Then again, for that reason, you might just wonder if the U.S. would push a button here or there to provoke Venezuela to move on its smaller neighbor.
I'm impressed with your intuitively rapid response to this "emerging" situation, Mathew. My father was born in Guyana (British Guiana at that time) in 1930, so I've had an interest in it, although I've never visited, and my father never returned after leaving for schooling in the UK at 14. After Cambridge and engineering he turned down a test-pilot role with Rolls Royce and worked in computer science from 1957.
But from his multi-cultural childhood he became passionate about global economics, the problems with third-world aid, and was deeply influenced by the work of Henry George and theories land value taxation; tax reform by reducing labour and capital tax and increasing land and natural resource tax. I suspect it is still relevant but relies on some amount of moral fortitude which is sadly lacking:
"More is given to us than to any people at any time before; and, therefore, more is required of us. We have made, and still are making, enormous advances on material lines. It is necessary that we commensurately advance on moral lines. Civilization, as it progresses, requires a higher conscience, a keener sense of justice, a warmer brotherhood, a wider, loftier, truer public spirit. Failing these, civilization must pass into destruction."
-Henry George
Albert Einstein said of George’s writing that “one cannot imagine a more beautiful combination of intellectual keenness, artistic form and fervent love of justice.”
Anyway my father eventually married an Australian and moved to Sydney where he discovered surfing. I'll include an excerpt from his memoirs (he died 2 years ago) on his childhood in Guyana which you may find interesting:
"We grew up under a number of cultural influences. The ancestry of my classmates included African, Bengali, Chinese, Portuguese, American and English. In my class room da Silva on my left is reading a Superman comic under his French grammar. “Matty” Matthews, a powerful black on my right, is arm wrestling me. Prasad, in the row behind, suddenly whispers “Look out man, here come de teacher” and we all stand up as Forbes Burnham, our black teacher of French, enters. They were my friends and only later did I learn of their diverse cultures and what brought their families together here. Miller, a small, quiet black boy, complained one day “Me Mum done always hitting me head with de roti roller.” Next week he was not there, kicked by a donkey over the weekend and we all attended the funeral. We filed past the open coffin. The relatives were loudly distraught, but Miller was inscrutable as ever. We miss him. Some of my father’s colleagues on Legislative Council were lawyers of Bengali ancestry. Our dentist, Doctor Wong, studied in America, as did Cheddi Jagan who later became Guyana’s first elected president.
On hot, lazy afternoons we played cricket in a field lined with paperbarks and eucalypts. In the Boy Scouts we were learning bush survival skills developed in Africa by the English general Baden Powell. After the Boer War he started the Boy Scouts movement while his wife started the Girl Guides. There was an Open Day at the Scout hall and Dad had been invited. We erected our bell tent, tied our reef knots, and demonstrated first aid on each other. Dad approved in a rare display of enthusiasm, and agreed to my going on scout camp. So, four weeks later we sat round the camp fire in the bush, watching shooting stars and singing a song about something called a kookaburra in a gum tree. Across the lake was an Amerindian camp which we reached next day in dugout canoes. They were rough-hewn and narrow so balancing, paddling and steering at the same time was a new skill we were learning. In the middle of their camp was a wild pig called a Peccarie lying on the dirt. Shot with a bow and arrow, it was about to be roasted on an open fire, none too soon as it was now covered in flies. Though missionaries built houses for tribes like this one, hammocks slung between trees under matting shelters better provided for the flexible life style more appropriate to nomadic survival in the bush. Later I will travel to the countries of Superman, cricket, and kookaburras. There I will find less tolerant cultures than the one I was fortunate to grow up in. But I will also read about some of the political turbulence created by my high school French teacher.
While I was still at school I knew Forbes had been away for two years at the London School of Economics and I think he must have acquired skills there that anticipated Stalin, for he later assassinated at least two of his opponents. Dr Walter Rodney was blown up by a car bomb, while a cult called The House of Israel was paid to dispose of a troublesome Jesuit priest, Fr. Morrison, who had been preaching what today we would call human rights. But the hit gang made a mistake, and a different priest, Fr. Bernard Drake, was beaten to death. Morrison later forgave the man who killed Drake, and wrote a modern history of Guyana. Morrison also tipped off Ryan, the American congressman, about Americans imprisoned in Jim Jones’ Peoples Temple cult settlement in the bush. My brother Tim once met a distant relative of ours, Guy Spence, who was Burnham’s pilot and who had flown up to Jonestown to bring Congressman Ryan back to Georgetown. As they were about to board the plane to come back there was a gunfight, the plane was shot up, Ryan was killed and Guy was lucky enough to be able to take off and carry a wounded woman back to Georgetown. Subsequently, 914 people died in the mass suicide.
Multinationals. ‘Bookers Guiana’ was the name given to the multinational Booker Bros, which had previously reformed and modernised a run-down plantocracy. Bookers then found itself in the position of a sugar monopoly. They were unsuccessfully targeted first by Jagan’s land redistribution programs on behalf of the people, and then by Burnham’s nationalisation programs very much on behalf of himself. Another multinational, a subsidiary of ALCOA, had also attained monopoly status, over the extraction of aluminium ore. A further gold mining subsidiary, with links to the Australian BHP company, was involved in a mining disaster when some three million litres of cyanide and heavy-metal waste were dumped into the Essequibo, a river upon which the livelihoods of some 23,000 people depend. As far as I know, Cheddi Jagan’s land reform programs, that might have curbed these resource-hungry multinationals and lifted that poverty-stricken society out of stagnation, continued to be resisted by the self-seeking cronies Forbes’ left behind him. But, unfortunately, land reform died with Cheddi. When Burnham died, his body was embalmed in Moscow, finally coming to rest in a mausoleum in the Botanic Gardens, where we used to play hide and seek as children.
On the names of places. Someone once wrote “Nothing is more tedious than a landscape without names”. Quite wrong. The “unknown region” is exciting precisely because we think it contains no names. And then when we slowly find that it does, nothing is more beautiful than the poetry of Amerindian names: Demerara, Essequibo, Mazaruni, Cuyuni, Arakaka, Pakaraima, Kaieteur, and Roraima. And then nothing is more fascinating than the origins of European settler’s names: the Dutch names for land reclamation, stellings and kokas, and the European names recording nostalgia, success and failure: New Amsterdam, Chateaux Margot, La Repentier, La Penitance, Good Intent, Better Luck, Success, Perseverance, and Adventure.
On growing up in Guyana. Tim and I grew up at the intersection of quite diverse cultural and political influences. Our family life was English traditional but, as far as conversation was concerned, virtually silent within which Tim and I built our own individual activities and hobbies. Our school life in contrast was multicultural, noisy and vibrant in which we learned to speak in a patois which our parents understood but pretended not to. My gang of six school friends was a kind of mild paramilitary in which we played out the characters in the Foreign Legion movie we had seen. The Boy Scouts was fun, with exciting camps in the bush, while the earning of proficiency badges was not taken all that seriously. All in all, our lives were pleasant and relaxed in a lazy, tropical country where nothing much seemed to happen. Even my French teacher, Forbes Burnham, was affable, sitting on the front of the teacher’s desk chatting instead of dictating from behind it.
On politics in Guyana. But I had no idea then that Burnham would become a president who would collaborate with CIA covert operations, murder his political opponents, and bankrupt the country. When the US finally tumbled to what had been going on, Kennedy’s special assistant, Arthur Schlesinger was to describe Burnham as “an opportunist and demagogue intent only on personal power”. Reading an obituary in 2009 for someone called Janet Jagan has reminded me of all this. Cheddi Jagan’s father had arrived from Bengal as an indentured labourer. Somehow he managed to send Cheddi to Queens College from where he studied dentistry in the US and where he married Janet, a white Marxist. Back in Guyana, they won the first free elections in 1953 in a landslide victory on a land reform platform. This displeased the British government which sent in troops and warships, and jailed the Jagans until 1957. Their return to power then displeased the Americans, and JF Kennedy ordered the CIA to destabilise the government. This was so successful that my old teacher Forbes Burnham, backed by the US, seized control. When he died in 1985, he had run up a debt five times the size of the GDP, bankrupting the economy. Guyana, rich in natural resources, became one of the Western hemisphere’s poorest nations."
A little history.
Guyana: THE FACES BEHIND THE MASKS
https://nsarchive.gwu.edu/sites/default/files/pdf/cia-rdp90-00845r000100190003-4-pages-18-25.pdf