Decree
On May 26, 2015, the Government of Venezuela issued Decree 1787 which purported to annexe the territorial waters of Guyana off of Guyana’s Essequibo coast. This action followed the disclosure that Exxon Mobil, a major international oil company, had found hydrocarbons in significant quantities in the territorial waters of Guyana. The effect of the decree was to encroach on the exclusive economic zone of Guyana and to extend Venezuela’s zone of military operations into Guyana’s territory. The exclusive economic zone is the 200 nautical miles from the baseline from which the breadth of the territorial sea is measured. Countries have the right to explore, exploit, conserve and manage that portion of sea. In projecting itself into the territorial waters of Guyana as it did, Venezuela ended upon encroaching also on the economic zone of Barbados, Suriname and Trinidad and Tobago. The action taken by Venezuela is a very aggressive one and seemed to take aim at the oil exploration activities of Exxon Mobil and the disruption of economic activity in Guyana. In light of this development, this article seeks to examine some of the repeated economic initiatives taken by Venezuela to thwart the economic progress of Guyana.
Different economies
The two countries have economies of different size and structure. Venezuela, the larger of the two, had a gross domestic product (GDP) of about US$438 billion in 2013. In contrast, the GDP of Guyana was reported to be about US$3 billion. The Venezuelan economy therefore is 146 times larger than that of the Guyana economy. A comparison also of the per capita income between the two countries shows that Venezuela has a substantially larger per capita income than that of Guyana. Venezuela’s per capita income was about US$12,550 in 2013 while Guyana’s per capita income was close to US$3,750. Taking a look back to when Guyana became independent, its per capita income was US$330 while that of Venezuela in 1966 was US$1,000. Interestingly, the per capita ratio between the two countries was virtually the same then at 3 to 1 as it is today.
The sectoral composition of each economy is different also. The services sector accounts for 60.8 per cent of the output of the Venezuelan economy; the industry sector accounts for 35.5 per cent while the agricultural sector accounts for 3.5 per cent of gross domestic product (GDP). The largest contributor to the Venezuelan economy is oil. It accounts for about 96 per cent of foreign earnings, 45 per cent of government revenues and 12 per cent of GDP.
Guyana on the other hand, has a more balanced distribution of output from the same three sectors. In Guyana, the services sector accounts for 4.8 per cent of output; the industry accounts for 38.5 per cent while agriculture accounts for 20.7 per cent of GDP. The largest contributor to the economy is gold at around 10 per cent.
In reality, Guyana is no match for Venezuela. Venezuela occupies over 916,000 square kilometres of space, more than four times the size of Guyana. Additionally, Venezuela has a population of 30 million people while Guyana has less than 1 million, indicating that Venezuela is 30 times more populous than Guyana.
Size difference
The Lucas Stock Index (LSI) declined 0.008 per cent during the fourth trading period of September 2015. The stocks of two companies were traded with 12,100 shares changing hands. There were no Climbers but there was one Tumbler. The stocks of Demerara Tobacco Company fell 0.05 percent on the sale of 100 shares while the stocks of Banks DIH (DIH) remained unchanged on the sale of 12,000 shares.
The geographic and economic size difference gives Venezuela plenty power over Guyana. The Decree 1787 that was issued by Venezuela was clearly aimed at making Guyana understand and recognize that might.
The illegal declaration by Venezuela, however, has placed again concerns about Guyana’s ability to develop the resources of the area unmolested. The issuance of Decree 1787 and its amended version was not the first act of obstruction against the legitimate economic ambitions of Guyana. There is evidence that as far back as 1850 when Guyana first found gold in the Cuyuni Venezuela raised objections to Guyana proceeding with its exploration and development. At that time, the boundaries were still to be settled. The ‘full, perfect and final settlement’ occurred in 1899 and was followed by a series of actions by both Venezuela and Guyana to demarcate the boundaries. There were exchanges of diplomatic notes in 1932 as further confirmation of each other’s territory in relation to the establishment of the tri-junction point at Mount Roraima.
Potential of Essequibo
In 1962 after the border dispute had been settled some 63 years earlier, Venezuela unilaterally declared the 1899 Award null and void. By that time the notable mining and logging potential of the Essequibo was known. In what appeared to be an effort by Venezuela to gain a foothold in the direct control and management of the resources, it proposed the next year that the British, the World Bank and itself undertake a survey of the resources of the Essequibo with a view to the three jointly developing the resources. This idea was rejected by Guyana.
Backdoor means
Having been rejected in its attempts to use backdoor means of controlling Guyana’s territory, Venezuela resorted to further acts of economic aggression. The most blatant was the invasion of Guyana’s portion of Ankoko Island in 1966, and the construction of an airstrip there. Further, in 1969 Venezuela was involved in encouraging ranchers in the Rupununi to disrupt the Guyana economy through a secessionist plot. The year before in the Times of London Venezuela made public that “it would not recognize any type of concessions, either granted or to be granted by the Government of Guyana” in the Essequibo region. The aim of this disclosure as observed by many was to scare investors away from the Essequibo. Venezuela gave effect to such threats in 1981 when it was able to discourage international funding for the hydroelectric project that Guyana intended to build in the Upper Mazaruni area. Again in 2000, Venezuela refused to allow Beal Aerospace an opportunity to set up a satellite launch pad in the Waini area.
Significant event
The oil find by Exxon Mobil represents a significant event in the economic life of Guyana. While the quantity of the reserves is to be made public, the ability of Guyana to engage in production and exportation has huge implications for the country. It would remove any dependence on Venezuela for oil concessions and increases the options available to Guyana for development and pursuing more independent relationships with other countries in and out of the region. It gives Guyana a chance to improve its defences as well. One could speculate that Venezuela feels that it has neutralized Guyana in the Caribbean region with the use of the Bolivarian Alliance of the Americas (Alba) and the PetroCaribe loan mechanism. However, the actions of the Bolivarian Republic impacted other countries in the Caribbean.
Violates Geneva Agreement
The decree issued by Venezuela – including in is amended form ‒ violates the spirit and intent of the Geneva Agreement which requires that no new claims or enlargement of existing claims should occur while the Agreement is in force. It is also a violation of international law.
