Every Man, Woman and Child in Guyana Must Become Oil-Minded Column 134
Introduction
This column is a continuation from last week which featured an adaptation of a presentation I made at an OGGN sponsored activity in New York last July 27. Recall that last week’s column described the meaning of sanctity of contract and the several exceptions which would negate the principle. The column showed facts and examples which stripped the principle of its relevance and application, a pointed response to President Ali and Vice President Jagdeo who embrace “sanctity of contract”, as an excuse for their refusal to honour their election campaign commitment to renegotiate. Today’s column looks at the principle of sovereignty, approaching it from two angles – the issue of sovereignty over natural resources, and second, sovereignty as a constitutional right and power of states.
Sovereignty over natural resources
The Petroleum Production Act (now repealed and set out in the Petroleum Activities Act) addressed the question of sovereignty in the context of ownership by providing as follows: “The property in petroleum existing in its natural condition in strata in Guyana is hereby vested in the State, and the State shall have the exclusive right of searching for and getting such petroleum.” Put another way, the State has an inalienable right to the natural resources within its territory. That statutory provision goes back some eighty-five years, long before the 1962 UN General Assembly adopted Resolution 1803 which elevated the right to one recognised as part of the international legal framework, one that even trumps nationalisation, meaning that the only remedy available to any person would be monetary compensation, but not specific performance. I submit that no court or arbitral body would compel any state to return a concession.
A close look at the first three paragraphs of Resolution 1803 is most instructive. Summarised, they affirm a nation’s right to control its natural wealth while providing a framework for responsible development and attracting foreign investment, mandating that resource utilisation must foster national development and enhance citizens’ well-being. They also allow the state to set its own terms for resource management, to establish rules governing the exploration, development, and disposition of natural resources, including the regulation of foreign capital inflows and seeks a balance between foreign investment and national sovereignty.
The disagreers
Not everyone was happy with “allowing” sovereignty, let alone permanent sovereignty to non-western countries. For example, in hardly disguised racist language, Henry Kissinger, the doyen of American diplomacy stated, “Oil is too important a commodity to be left in the hands of the Arabs”. To his hypocritical credit, Kissinger also said that “The contemporary world can no longer be encompassed in traditional stereotypes. The notion of the northern rich and the southern poor has been shattered. Mary Pillsbury Lord, the flour heiress, criticised the 1952 Resolution as “Unfortunate history”, while others went further, demanding equal terms to the trade and the raw materials of the world.
Sovereignty is no academic construct, but a foundational principle of international law recognised by a UN International Law Commission. Importantly, permanent sovereignty is intended to further national and collective interest. The very concept is designed to overcome economic injustice, the direct legacy of colonialism. Importantly too, is that economic sovereignty is the basis of political sovereignty. One does not exist without the other. Or as one of the original thinkers on the sovereignty question said: Sovereignty is or is not. There is no concept as partial sovereignty.
No silver bullet
It would be incorrect to identify the UN Resolution as transforming the international arrangements for the control of petroleum resources. The lock into which the West had gripped the Middle Eastern countries – colonial control, political structures and oil agreements – were shackles from which it was not easy to free themselves. Indeed, the 2016-type of Agreement signed by Guyana was certainly not atypical of the colonial era. We must remember too, that the West had installed leaders like the Shah of Iran who were favourably disposed to the American and British oil companies.
In fact, things really changed after the upheavals in the Middle East which eventually led to the OPEC countries flexing their muscles, taking control of the market via embargo and production and price fixing, all with grave consequences for the world economy. One undeniable consequence was that the countries exerted full sovereignty and control over their petroleum resources.
On the other hand, Guyana moved backwards, ceding sovereignty over its petroleum resources to two American and one Chinese companies. The shameful difference between Guyana and the OPEC countries is that our political leaders willingly sold us out (to use Jagdeo’s words), rendering irrelevant the UN Resolution on permanent sovereignty over natural resources.
The final instalment on the subject will examine how we have ceded constitutional sovereignty to the oil giants.
