Norway has provided a Memorandum of Understanding (MoU) and though we will see some cash from this, most of the cash flowing in years 1 and 2 will not aid Guyana’s development, but rather fund international scientists who will run and control the monitoring system that has to be put in place before the back end of the money can flow. But the operative question is, will the back-end funds flow and how will they disrupt our traditional economy, especially our mining and forestry sectors?
Forestry production at the half year of 2009 earned US$16.5M, and this sector is not expected to earn more than US$50M, with strong pressures being applied against the wholesale reaping of logs (quite justifiably) as opposed to processed wood. The gold-mining sector is expected to be the star of 2009 since they are on target to produce Ca300,000 ounces of gold to become the highest sectoral revenue generator in the country, earning ca US$285M in 2009. The bauxite industry will severely under-perform as a result of the global recession and industrial unrest, and is not expected to earn more than US$85M in 2009 with respect to export receipts. Collectively, the mining and forestry sector is going to earn Guyana ca US$420M in 2009. That is quite a sizeable chunk of our economy and thus these sectors are very important and any tinkering with them must be to the benefit of Guyana’s vested interests. When the assessment of Guyana’s rainforest is complete using satellite imagery, will the Norwegians then demand that some of the funds be directed at the replanting of trees? Will they request that these funds be used for further reformation of our forestry and mining sectors to make them more environmentally compliant? What would be the impact on them as a result of the Norwegian MoU? All these questions have a direct bearing on the employment of our people and on how much of these funds will be available for large infrastructural projects that are core to any nation’s developmental agenda. There are more questions than answers, and I personally feel that there was a rush to sign without thinking through the implications for the economy.
All this hype about the MoU can easily allow the regime to be accused of ‘greenwash-ing’ the nation, since there is a high chance that bread may be taken out of the mouths of miners as a consequence of it, and it makes no sense to constrain Guyana’s top performers to satisfy a green agenda. If we want to be the green pin-up child, we should have secured the funding to clean up our green anomalies before committing to any MoU. But we are where we are, and we have to work with the realities. Our policy-makers must be extremely careful in understanding the details of the Norwegian MoU and the new REDD+ funds before they make any further commitments.
So let us flesh out this MoU signed on November 9, 2009, with Oslo. US$30M will be allocated to be used in the name of Guyana starting, in 2010 and can be ramped up to US$250M by 2015. According to Google an MoU is an expression of the union between parties indicating an intended future common line of action. However, it is not a binding contract on Norway to pay us US$30M since it is not legally enforceable. It is like a bamboo wedding without the GPO process, and thus it make the process of a divorce between Guyana and Norway as simple as walking away. This concerns me since if we are to invest heavily as a country to implement this MoU and Norway is not satisfied with our proposals, then all they have to do is walk away. Further, this MoU will only be actionable if and only if, Guyana fulfils the pre-conditions of the document. The truth of the matter is, the devil is in the details.
Some of the pre-conditions of the document are:
1. Norway intends to establish a REDD-plus Investment Fund (GRIF) for Guyana;
2. GRIF will be managed by a reputable international organisation (my comment – some of the money intended for Guyana’s development will leak as fees to this organisation to manage the funds and this does not benefit Guyana);
3. full oversight of this pot of cash will be done both by the national authorities and internationally (my comment – laws may have to be passed to enhance our financial transparency and maybe finally the Public Procurement Commission will be instituted which is a good thing);
4. This pot of cash will have to pay for its own administrative and monitoring costs (my comment – the team of international specialists and the fees for the satellite imagery company in Europe will be funded from this US$30M, so how much will be left for Guyana’s developmental needs is a very pertinent question). The Joint Concept Note for this MoU states that the level of support will depend on Guyana delivering results as measured against two sets of indicators:
(i) Enabling indicators
* Reducing deforestation and forest degradation in a consistent manner with the prevailing internationally recognised framework (bottom line, preserve our forest and this preservation process must be certified by the UN system) (my comment – if we fail to preserve our forest as expected by these international monitors, it will have a direct impact on the release of the full US$250M. I have a problem with this since the mining sector must be supplemented by alternative economic activities that replace the jobs lost as a result of reformation of that sector. Guyana has to advocate strongly for opt-out for the current state of our mining sector and this MoU should only be applicable if future degradation occurs beyond a certain level as a result of actions by members of the sector. If not, it is best to tell the Norwegians to hit the road from now before we make any institutional investment in this MoU).
* The GRIF must be operational before any contributions can be disbursed.
* Annual independent assessment will be done periodically by neutral expert international organisations and will form the basis for subsequent disbursements (my comment – so these international experts will have to establish Guyana’s opening inventory of forest and a closing inventory some time in 2010 to establish how much of the US$30M we are entitled to. President Jagdeo was quoted as saying we are going out to tender for an internationally replicable Monitoring Report-ing and Verification (MRV) system that will use remote sensing devices and satellite imagery to identify any change of carbon stocks in our forests. With those techniques we will be able to assess whether the country performs in accordance with the agreement. If the MRV says we violate the limits set by the MoU, no disbursement to Guyana, notwith-standing the fact that funds would have already been spent on the satellite time (expensive stuff), the trips for the international scientists, and the administrative expense to manage GRIF. The reality, the money will start to be spent before we can confirm if we can benefit from the GRIF.
Madness, utter craziness. My professional life here in the UK is all about sealing financial deals and I was part of enough new deals to share in the champagne, but to subsequently witness the same persons who gloated about the new deal in the past, coming back subsequently to say the technicians, the boys in the back room, were putting the disbursement of the funds in jeopardy. So from where I sit, my focus is on the details, not the news flash).
(ii) Fulfil a set of performance indicators
* CO2 reduction will be estimated based on set criteria and will be priced at US$5 per tonne (nice price for our forest when the current price for CO2 on the market is US$12 per tonne). (My comment – it makes better sense for Guyana to sign a bilateral agreement with private sector emitters like BP for them to pay us market rates for portions of our forest which can be traded on the carbon market.)
* Now $30M is not set in stone since it is the upper limit for 2010. Guyana has to demonstrate maintenance of our stock of forest to absorb CO2 and this has to be verified by a neutral international agency.
* Norway will work to get other contribu-tors to join the scheme (my comment – the USA and China have spoken and the reality is the other way around, Norway will have to bolt on their funds to the US$10B Copenhagen cash and thus Guyana at a maximum is expected to get only an additional US$45M per annum from Copenhagen. To get that additional US$45M we have to meet the criteria set by the group of experts at Copenhagen, another army of consultants who will have to be funded).
Tough road ahead and it makes better sense to get on with our traditional developmental agenda and abandon the LCDS, since countries like Gabon without any investment in any LCDS are going to be significant beneficiaries of the Copenhagen funds. The reality is no amount of advocacy will change the international dynamics and that is why the President’s advocacy for climate change was a waste of Guyana resources.
The G20 countries contributed significantly to the poverty level in the developing world and every 5 years their consciences will allow for them to come up with some idea to pour funds into the developing world – but on their terms. Remember the MDG, much propa-ganda, some fund commitments, some got-off-the-ground projects, and that was it. Remember the HIPC agenda? Loads of hype and debt write-off, even for countries which did not advocate it. Then there was the HIV funds! Now we have REDD+ funds and the cycle continues. The reality is, we are fund-takers and thus we have to accept the terms of the agreement set by the fund-givers. One of the terms of these agreements entails buying all the technology from the G20 countries (one-way cash flow from developing to developed countries) and most importantly, paying the fees to the army of consultants who mainly come from the G20 countries and who do not come cheaply (again a one-way flow of funds from developing to developed countries). This is the reality. Thus when the developed world advertises that they are helping the poor and the powerless, they are really helping themselves at the expense of the poor and the powerless but getting all of the positive PR to demonstrate that they have given.
Guyana has to seriously revisit its development model to ensure that we leverage the craftiness of the powerful of the world to our benefit. Singapore did, Mauritius did and they broke the bondage of poverty, so why can’t we? First of all, we should solve our electricity problem at all costs. This is Guyana’s future, not Copenhagen, not LCDS.
Yours faithfully,
Sasenarine Singh
