Author: Christopher Ram

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Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 144 – November 30, 2024

Exxon and Hess Give Thanks: A Turkey Named Guyana

Thanksgiving has been silently making its presence felt in Guyana with the Black Friday sale looked forward to by shoppers spending on things they do not need because they will save on Black Friday spending. The idea is an incident of Thanksgiving – a day dedicated by Americans for gratitude and feasting, celebrating their blessings and abundance.

This column can report that the celebration took on a uniquely Guyanese flavour in Exxon and Hess’s boardrooms. At their table, the centerpiece was not just a golden turkey lathered with Guyana oil, but the entire country of Guyana, with steam rising from its golden-brown oil wealth, its aroma drawing corporate vultures and shareholders to circle the feast. It was all made more sumptuous by a phalanx of politicians, professionals, regulatory institutions, and the national cricket franchise providing the stuffing – a mix of ingredients ensuring that the carving proceeded smoothly, with no obstacle along the way.

A Feast of Broken Promises

Before the 2020 elections, Guyana’s now President and chief Vice President thundered against selling out the national patrimony to ExxonMobil, Hess, and CNOOC. They promised to renegotiate terms to ensure fairness, national benefit, and justice. But once in power, these lofty promises dissipated into silence, replaced by the chant of “sanctity of contract.” The transformation mirrors the devastating betrayal of Native Americans centuries ago: invited to share their bounty under the guise of partnership, only to watch as disease decimated their populations, settlers seized their lands, and broken treaties shattered their sovereignty. Their feast of sharing became a near-genocidal tragedy.

Today, Guyana faces its own existential threats. While the weapons are not smallpox, blankets and muskets, the environmental degradation from oil spills and gas flaring poses similar dangers to national health. The economic exploitation through a skewed contract drains the nation’s wealth as surely as land theft impoverished Native nations. Adding cruel irony to injury, Guyanese citizens now face deportation from the United States under harsh immigration policies – forced to return to a homeland whose resources are being carved up by American corporations.

Politicians as the Stuffing

As every Thanksgiving host knows, stuffing is essential to the turkey. At Exxon’s table, a blend of political, legal and regulatory actors ensured that the feast remained undisturbed, each ingredient playing its part in this corporate banquet of exploitation. Here is the bio of some of these players.

The Politicians. Guyana’s political class forms the base of bland and backboneless stuffing crumbs, lacking substance but quick to soak up corporate arguments. These include the leaders who once promised renegotiation but now serve Guyana as the turkey on a platter, parroting Exxon’s line about frightening investors and ruining Guyana’s reputation. Their evolution from defenders to enablers was the toast of the occasion.

The Attorney General – Like spicy sausage, he adds energy and legalese to the stuffing. The AG’s role goes beyond passivity to active defense. In court actions challenging the environmental and contractual terms of oil operations, he frequently appears as a disguised advocate for the oil companies, wrapping corporate interests in the language of national benefit.

The EPA is like celery without the crunchiness, stringy and hollow, having lost its voice, brains, and direction. It fails to hold Exxon accountable for environmental risks, leaving citizens to bear the dangers of oil spills, flaring, and ecological degradation. Its weakness in the face of environmental threats speaks volumes about institutional capture.

Professionals and civil society. Most are like dried cranberries, adding a sheen of professionalism, patriotism and independence while helping to draft contracts, massage numbers and engage in creative writing to perpetuate the status quo. Only a rare few – willing to risk a plate at the table – stand up for the people, offering a faint but vital glimmer of resistance.

Amazon Warriors and their supporters. At the national sports stadium, cricket fans wave at foreign cricketers wearing the Exxon shirt alongside the Golden Arrowhead – nationalism slowly drowning in a sea of corporate branding.

Guyana on the Table

The turkey itself – Guyana’s oil wealth – is as vast as it is vulnerable. With billions of barrels in recoverable reserves, the country should be poised for transformative development. Yet the contract terms leave Guyana with only a fraction of the profits while requiring the nation to reimburse the oil companies for their expenses, including taxes paid abroad.

No Thanksgiving feast is complete without a drink, and Exxon and Hess have the perfect accompaniment: Guyana’s light sweet crude. Former Minister Raphael Trotman once remarked that it is “so sweet you can almost drink it.” And drink it, Exxon and Hess do – straight from the source, savouring every drop as Guyanese have no clue of their operations and how they manage ceded sovereignty. For them, Guyana oil is not just raw crude to be refined but is the driver of profits and dividends for Americans and crumbs for Guyanese.

A New Threat to Sovereignty

Now U.S. lawyers press to practise their trade in Guyana, violating the Local Content Act and national and regional arrangements governing the training and practice of lawyers. This mirrors historical patterns of external forces seeking to dominate Guyana’s resources and institutions. Such an incursion would dilute local legal services and undermine the very laws meant to protect the country. Like the Exxon contract, this demand represents yet another attempt to erode Guyana’s sovereignty under the guise of progress and partnership.

A Call for Courage

Contracts are not sacred texts. They are tools created by humans to be revisited when they fail to serve the greater good. Guyana’s leaders must break free from serving at the Thanksgiving feast to fulfill their sacred duty as guardians of the nation’s sovereignty and resources.

To end the epicurean analogy, Guyana needs more vegetarians, unwilling to participate in Exxon’s feast. While Exxon & Co carve up Guyana’s wealth and politicians line up as ingredients, the vegetarians stand apart, untempted by this gluttonous banquet. Their conscience, like their diet, refuses to consume what is tainted by exploitation.

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The proposed amendment to the Acquisition of Lands for Public Purposes Act sets a dangerous precedent and should be withdrawn

To the Editor,

The government’s proposed amendments to the Acquisition of Lands for Public Purposes Act (the Act) should cause concern among property owners, legal practitioners and citizens. While the Bill seeks to address specific issues, it fails to modernise the framework to respect the Constitution and reflect fairness, transparency, and equity.

Even though no individual property owner should be permitted to obstruct critical national development projects unreasonably, this legitimate concern must be balanced against the constitutional rights of citizens and principles of fair compensation. The solution lies not in maintaining an antiquated framework that undervalues private property rights, but in establishing a modern, equitable system that serves both public and private interests.

In my 22 March 2024 column in the Stabroek News “Time for a Fairer Compulsory Acquisition”, I advocated for positive reforms that balance development needs with property owners’ constitutional rights. This Bill represents the opposite of such reform, retaining and reinforcing outdated practices and failing to address the inherent inequities in compulsory acquisition.

The principal legislation is rooted in the misconception that “market value” without more represents fair compensation. Compulsory acquisition, by its very nature, deprives citizens of their property involuntarily. As such, compensation must reflect not just the property’s market value but the forced nature of the transaction, including the psychological pain of disposition. Fair compensation should include a premium—no less than 25% above market value – to account for this dispossession, a principle recognised in progressive jurisdictions worldwide, including India. A simple amendment to section 19 of the Act would address the problem.

In 1990, the formal role of the Chief Valuation Officer (CVO) in executing the application of the Act was officially eliminated. Yet, the Government has continued to present the CVO, cloaked with the air of officialdom, at meetings with citizens whose property it intends to acquire under the Act at deflated values. Since the CVO is a government employee, the perception of bias and impartiality is inescapable. Modern legislation across jurisdictions provides for a Board or Panel of Assessors for valuation purposes.

A caring Government would not make a 1914 legislation more oppressive and backward but would embrace reforms that ensure:

  1. Compensation includes a compulsory acquisition premium above market value.
  2. Valuations are conducted transparently and independently of State influence.
  3. Public confidence is restored in the fairness of the process.
  4. Transparency and public disclosure.

As Guyana undergoes transformative economic development, we must ensure that national progress does not come at the cost of citizens’ rights. The Bill represents a crude and cynical reaction by the executive to a ruling by a judge of the High Court against the Government in a compulsory acquisition case. If there is a measure of perverse fairness in this retrograde step, its victims will be government supporters and non-supporters.

If that is not bad enough, it appears to be an attempt by the Executive to override a first-instance court decision, bypassing the normal appellate process. More troubling still is the possibility that this legislation could be applied retroactively to matters already before the Courts. Such an approach strikes at the heart of the rule of law and the constitutional principle of separation of powers. It sets a dangerous precedent where dissatisfied with judicial decisions, the Executive might routinely resort to legislative amendments rather than pursuing proper legal appeals.

This Bill should be withdrawn forthwith.

Yours sincerely,

Christopher Ram

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Business and Economic Commentary by Christopher Ram Part 18

Part 18 – November 14, 2024

Modi’s visit – euphoria vs. reality

Introduction

The first visit to Guyana by an Indian Prime Minister since 1968 played out well for Narendra Modi back home. The twin objectives of the three-day visit were the CARICOM-India Summit and bilateral talks with Guyana, exchanges between the world’s most populous country and part of the Indian subcontinent and a tiny region of fifteen member countries and five associates, all with a population of sixteen million. While both talks were held in Guyana, the Guyana and Indian press were all about the relationship with Guyana, a country with a significant share of its population tracing its origin to India. No wonder Modi described feeling “a spiritual bond” during his stay in Guyana.

For its part, Guyana outdid its reputation for hospitality. For the entire visit, the country was all about the Prime Minister, who was equally generous about his hosts, describing Guyana as boasting one of the most vibrant democracies in the Caribbean region. The carefully choreographed visit saw Modi receive Guyana’s Order of Excellence amid enthusiastic diaspora celebrations and declarations of spiritual connection. Yet, beneath the near euphoric embrace of cultural affinity and shared historical bonds lay more nuanced and transactional calculations from both countries.

Rhetoric v Reality

It is not entirely clear that Modi’s lofty rhetoric reflected the political realities in the two countries. Neither did the cultural symbolism and forward-looking plans, which mask the complex interplay between diplomatic aspiration and strategic reality of both countries. For example, his emphasis on democratic values, repeatedly calling India “the mother of democracy,” and his praise of the vibrancy of Guyana’s democratic credentials seem excessive. India’s documented democratic backsliding under Modi – including Freedom House’s downgrade to “Partly Free” status and that country’s rating by the V-Dem Institute as an “electoral autocracy” classification are well known.

For its part, Guyana has lost its parliamentary vigour; inclusionary democracy has given way to a winner-takes-all culture in which critical constitutional provisions are treated with half-measures and where accountability and transparency are superficial. During the visit, the absence of scheduled meetings with Guyana’s parliamentary opposition further underscored the country’s democratic deficit, reflecting a pattern of limited opposition engagement that characterises both nations’ current political landscapes.

The visit’s concrete outcomes, particularly regarding energy, revealed Guyana’s transactional approach even when dealing with a trusted friend and ally. The cynical delegation by the Guyana President to his Natural Resources Minister, Vickram Bharrat, to respond to requests from India for the sale of its share of profit oil from the Stabroek Block was disrespectful to Prime Minister Modi. It was in poor taste for Bharrat to state that Guyana “will make a decision at some point in time”. That was compounded by Vice President Jagdeo’s denial that Guyana’s sale of crude has been discussed. This matter was raised with Vickram Bharrat when he visited India very early this year. This uninspiring response about lifts was particularly striking given that a simple deferral of one cargo lift could have facilitated a deal, suggesting a more selfish transactional approach by Guyana.

Omissions

A business column must also note the absence of tangible action to advance discussions on fundamental economic frameworks – specifically a Bilateral Investment Treaty (BIT) and a Double Taxation Agreement. These omissions are significant given India’s interest in acquiring stakes in Guyana’s oil exploration blocks and Modi’s rhetoric about comprehensive partnership. Without these basic treaties, which provide legal certainty and protection for cross-border investments and clear tax frameworks, substantial Indian investment in Guyana’s oil sector remains complicated. Despite months of preparation for the visit, the absence of progress on these fundamental agreements suggests a lack of detailed pre-visit negotiations or more fundamental hesitations about deepening economic ties.

The public reports did not mention any substantive dialogue about Guyana potentially joining BRICS+ despite India being a vital member of this expanding economic bloc. This omission, coupled with the lack of progress on basic economic frameworks, suggests that both countries carefully calibrate their relationship within broader geopolitical contexts. For Guyana, balancing its emerging role as a major oil producer with existing Western and Chinese partnerships and its regional obligations requires careful diplomatic navigation.

The visit also overlooked Guyana’s historical significance in the Non-Aligned Movement (NAM), a curious omission given both countries’ shared heritage in this forum and current discussions about Global South solidarity. This silence probably served a mutual and uncomfortable truth – in the case of India, the role in that Movement of the Congress Party of India, regarded by Modi as a significant opponent, and in the case of Guyana, the outstanding role of the late Forbes Burnham, former Prime Minister of Guyana and leader of the now opposition party in Guyana in NAM.

The preferred route

Both sides might also have had their strategic interests to consider. For Guyana, Venezuela’s territorial claims to Guyana’s natural resources-rich Essequibo region cast a long shadow over any major oil sector decisions. Modi’s silence on this controversy, while diplomatically expedient given India’s interests in Venezuela, highlighted the intricate calculations involved. The Ali Administration, having benefitted from the USA’s role in resolving the 2020 elections impasse, has strengthened its economic and security ties with that country. It may also be hoping that President-elect Donald Trump will help usher in a less antagonistic and bellicose government in Venezuela.

Instead, the two leaders stuck to safe diplomatic territory, such as cultural connections, and the strengthening of cooperation with promises in sectors like healthcare, education and agriculture, although significantly not sugar. Any discussion would have invoked the Chinese elephant in the room and possibly the recognition that sugar may soon cross the precipice of survivability.

Conclusion

Several factors suggest genuine and increasing opportunities for deeper engagement in a potentially mutually beneficial relationship: India’s position as the world’s third-largest oil consumer and Guyana’s interest in exploiting its petroleum possibilities as quickly as possible. The reelection of Donald Trump as US President will change – for the better or worse – all international equations, particularly in the Middle East and Ukraine. The implications for Guyana can be significant, and it clearly does not consider that it is in its interest to strike deals that might not please Trump.

In real and tangible ways, the visit resulted in net gains for Guyana, while India’s only request was denied. When a diplomat as astute as the Indian Foreign Minister says India is not disappointed, you can be sure they are. If there is some irony, Guyana has a much faster growth rate than India, and its per capita GDP is several times that of Guyana.

Yet, Modi would have gained from at least three sources. The publicity back home was all positive; Guyana was reminded that China is not the only Asian powerhouse with which it can do business. And personally, for Modi, enhancing his international standing was a badly needed tonic after his June election setback, in which his party lost its parliamentary majority.

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Business and Economic Commentary by Christopher Ram Part 17

November 10, 2024

Trump 2.0: Economic Lessons and Challenges for Guyana


Introduction


A transactional electorate has overwhelmingly voted to return to the presidency in the United States of America a convicted felon, a misogynist, a businessman who owes his success to scamming, the exploitation of the tax and bankruptcy laws of that country, and a man who has been ordered by the courts to pay millions for sexual assault. And just a small bit of irony – he will be sworn in at the same place where he led an insurrection four years earlier.


For contrasting reasons, Trump’s re-election is particularly significant for Guyana and the rest of the world – north and south, democratic and unfree, rich and poor, large and small. Trump befriends and admires Russia’s Putin, North Korea’s Kim Jong Un and Hungary’s strongman Victor Orban while calling the leaders of his domestic Democratic rivals “enemies from within,” threatening to let loose the Justice Department to deal with them. I have always treated the moniker of America as the “greatest country on earth” with grave doubts, but certainly that would not now earn a place on a late-night comedy show.


Trump 1


Trump was first elected President in 2016 when Guyana had only just had a few oil discoveries under David Granger, and it was in the twilight of Trump 1 that the USA intervened to impose clarity and democracy in Guyana by bringing Granger to his senses and ushering in the Ali Administration. Now, with Trump 2 only a matter of months away, Guyana faces the prospects and challenges from a dramatically different position than during his first term.


In 2016, Caribbean analysts warned of increased protectionism, reduced development assistance, and challenges to correspondent banking relationships – predictions that largely materialised. This time around, as a not insignificant oil producer, Guyana must navigate these renewed challenges with ExxonMobil’s role as an extension of US foreign policy in our midst and playing an outsize, dominant role in Guyana’s economy, politics and society.


Trump’s promised trade policies – including a 20% tariff on all imports and 60% on Chinese goods – echo the protectionist stance that characterised his first presidency. Oil is Guyana’s biggest export to the USA, and it would be interesting to see whether Exxon’s and Hess’ oil imports in the USA will escape Trump’s tariffs. It would be the greatest irony if the US’s IRS allows Exxon and Hess to claim a credit for taxes which we in Guyana pay but imposes Trump’s tariff on their imports of Guyana oil into the USA. While the Stabroek Block is Exxon’s and Hess’ Kohinoor (jewel in their crown), Trump might want to promote America’s oil production over imports.


Oil


But Guyana exports to the USA is more than oil. Caught in any genaralised tariffs could be agricultural produce, seafoods and gold. If Exxon and Hess face any pushback in the US from their Guyana production, they will play hardball with Guyana to prevent any setbacks to their good fortune. As I expressed in 143 of the Oil and Gas column this past Friday, their resistance to renegotiation of the 2016 Agreement will be even greater than it is today.


But however oil is dealt with as a tariff issue, the impact of Trump 2 on oil price is even more certain and consequential. Already we have seen the fall in price with expectations of further reductions over the next year. If there is the easing of geopolitical risks, the ending of the Russian – Ukrainian war, Israel’s declaration of victory and its war aims, prices can really tumble with grave implications for the budget. These are real prospects and the backdrop to Government’s announcement of its intention to seek a supplementary budget for the $60 Bn or more to pay the $100,000 cash grant to all Guyanese. No time for explaining that there are two sides to a budget – the expenditure authorisation side and the funding side. We are still to be told where the money will come from, or its impact on inflation and the exchange rate. But that is an aside.


Trump 2


Trump is likely to pull out from the Paris Accord (again) heightening the risk of accelerated global warming with direct, catastrophic consequences to low-lying countries like Guyana. The change from the Trump 1 era to Trump 2 era is that Guyana has moved up in the league to being a rich country to which development assistance might no longer be available.


There must be tens of thousands of Guyanese caught in the deportation drive. That will pose a huge housing, economic and social challenge to the Guyana economy and society even as we seek to accommodate and adapt to the huge influx of Venezuelans in Guyana. It is unclear how prepared Guyana is, but I worked with Joe Harmon in an NGO providing assistance for compulsory returnees and am aware of the huge challenges which arise.


Responding to Trumpism


The lessons from Trump’s first term show that reliance on a single market or sector creates dangerous vulnerabilities. The Ali Administration has itself become trapped by the Dutch Disease even as we hear of job losses in the oil sector, the outsourcing sector and even a prominent bakery, all on top of the destruction to our village economies with the proliferation of Chinese businesses in every corner of the country.


While oil dominates our current economic discourse, we must strengthen the existing sectors and create the conditions for the diversification into a robust, resilient economy. This is not a job task for the Government alone and it is sad to see how little the major private sector companies contribute to import substitution, let alone exports. Nand Persaud in rice best serves Guyana and while GuySuCo produces some sugar, the cost of maintaining the Corporation is prohibitive and possibly unsustainable. So much on the shelves from the supermarkets – including water, for Pete’s sake – is imported, as are chicken, eggs, fish, beef and pork, vegetables etc.


ONE GUYANA is a good political slogan. Let us paraphrase Trump and make PUT GUYANA FIRST our economic motto,

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Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 143 – November 8, 2024

Trump’s Victory a reality check for Guyana

Introduction


The world continues to process the stunning outcome of Tuesday’s U.S. presidential election, with Donald Trump’s unexpected return to power sending shockwaves through global markets. While the political implications are far-reaching, the focus of this column is an examination of what Trump’s presidency means for the oil and gas sector, particularly given the lessons learned from his first term. The landscape has shifted significantly for Guyana since 2016 – we now stand as an oil producer rather than merely a regional observer, making both historical lessons and future prospects increasingly relevant to our national interests.


The immediate market reaction to Trump’s victory was telling, with both major oil benchmarks showing significant decline. Brent crude dropped 61 US cents to $74.92 per barrel, while West Texas Intermediate fell to $71.69. Citi’s forecast of continued downward pressure through 2025 poses particular challenges for Guyana, which has embarked on ambitious spending plans based on previously optimistic price projections. The potential drop to around US$60 per barrel from July 2024’s high of US$84 represents a concerning 30% decline that could severely impact our budgetary plans, especially as the government contemplates significant payouts to citizens ahead of our 2025 elections.

Trump’s impact


Trump’s potential impact on oil prices presents several counterbalancing forces. At home, his renewed “drill, baby, drill” agenda and promised deregulation of U.S. oil production could increase global supply. Abroad however, there can be offsetting events and activities. Trump had boasted that the war in Ukraine would end almost immediately, possibly putting upward pressure on oil prices by enabling global economic recovery and increasing energy demand. On the other hand, if this leads to the end of sanctions imposed on Russian products, it could result in an increase in supply. It is unlikely that Iran will return to the international market while continuing turmoil in Venezuela is hardly likely to see any significant oil coming to the international market.


For Guyana, this complex dynamic intersects with both structural and regional challenges. Based on its own perverse logic, the Government failed to apply ringfencing between production and prospecting activities. As we have explained in these columns, Guyana is in fact subsidising exploration activities today in the hope that the rewards in the future will make the sacrifice worthwhile. Well, Trump 2 makes that future look far less rosy, and we are now staring at the prospects of 14.5% take each year for an extended period. The PPP/C has become drunk with oil and never for a moment did it consider how vulnerable the 2016 Agreement makes the country to oil price fluctuations. Setting this aside however, Guyana’s position differs markedly from our Caribbean neighbors – while they continue to grapple with energy security concerns, as they did during Trump’s first term, we now face the challenges of managing newfound oil wealth.

Guyana’s response


Trump’s election poses a challenge to Guyana’s policymakers who will have to carefully navigate his mercurial temperament and transactional approach to everything. The challenges outweigh the opportunities. While other Caribbean nations must again brace for potential impacts on development assistance and trade relationships, Guyana needs to balance these regional concerns with our position as an emerging oil producer.
The mixed outlook following Trump’s re-election requires us to focus on those areas within our control: improving our regulatory oversight, building fiscal buffers where possible, and continuing to develop our broader economy. The experience of Trump’s first term shows the importance of preparing for policy volatility while maintaining regional relationships and economic diversification efforts.


The need to diversify the economy has not received the attention it deserved. Sadly, it may now be too late as the Dutch Disease has touched almost every sector of the economy. If ever there was a need to call for the renegotiation of the 2016 Agreement, it is now too late. Routledge will report us to State Department and there will be a call to Georgetown to keep the natives in line. If ever there was need for careful financial planning, management and control, the runaway spending train has already left the station. If ever it was important to draw the line between current expenditure and intergenerational savings, the automatic drawdown level has been set to high.


As the world contemplates Trump 2, Guyana faces some real challenges. The week has been transformational, and the only hope is that things will not be as bad as they seem.