Dear Editor,
I have a sense of great reward in my letter of last week on, “not depriving ourselves of joy in Exxon’s discovery of oil off our shore.” It generated strong reactions and a necessary, significant amount of national discussion. True, many of the public responses sought to ridicule, dismiss and reject any thought about being joyful about oil – no joy about the direct cash flows adding to our national income, nor the job opportunities and its contribution to our overall growth and development?
The commentaries by my younger friend, Mr. GHK Lall, in Kaietuer News and Stabroek News, display his unmatched mastery of satire and sarcasm; but we have a people and nation to build: creation not derision should be our game. I appreciated and commend the column of Freddie Kissoon, “That Samuel Hinds letter” in the Sunday Chronicle of 6th October. Peeping Tom in “What an astonishing display of defeatism” (Kaieteur News in October 7th, presents a fair summary of my arguments in his first three paragraphs, then in his six following paragraphs displays a number of the contradictions which abound in us, as we grapple with our recent history of enslavement, indentureship and ongoing exploitation; whilst we struggle to live in the world of today in which a number of us and our children have earned places of which we are rightfully proud, amongst the descendants of our “exploiters.” Contradictions were revealed which bedevil us, which we need to resolve and reconcile.
Aware of these contradictions, I want to flag the danger that is indicated in the parable of the stewards who were given five, two and one talent. The steward who received only one talent found no joy in that “small” blessing; seemed to have felt discriminated against, given “scraps,” recognized that his lord was an exploiter: and so, disconsolate, he buried his one talent. Many of us at Sunday school would have learnt that in the end even that one talent was taken away from him. May no one of us be like him. I want to flag the danger that all the talk that we should be receiving so many times more, whether true or not, might induce too many of us to similarly “bury” what we have. All that talk understandably has much righteous indignation behind it, but questionable substance.
Concerning the US$10 billion which those persons say we should have received by now, you should be sure that if there were no real counter arguments, we would have received the US$10 billion just as we received the US$4.4 billion. Let me recall here the saying that a bird in the hand is worth two (or more) in the bush. From my experience and readings of our newspapers, I am guessing that much of the additional money claimed is related to two things (i) taxes waived, (ii) the lack of ring-fencing.
Firstly, when it is said that our Govern-ment has to pay Exxon’s (the Consor-tium’s) taxes, our Government does not have to take money from elsewhere to pay the taxes waived. There is usually a paragraph in such Agreements that says that royalties and other payments to the Government would be received in the place of taxes. To keep the GRA Com-missioner happy, there is a book transaction. A good question would then be whether we are getting more from our royalty and profit share than we would have gotten from regular taxes.
It depends on the prices in the market at the time – and you should expect periods of boom (high prices) and bust (low prices). Over about 2010 to 2014, I have seen spot prices for crude oil range over US$140/barrel to US$35/barrel. When prices are high, the royalty and profit share easily give us more than regular taxes: when prices are low taxes would have given more, but the operation might soon not be able to cover its costs and stay sustainable. An operation facing greater fixed costs of regular taxes, and higher fixed royalty will more quickly fall into the red and the operations paused, workers sent home. When things turn out really bad the operations may be abandoned as it seems to be the case with the Troy Resources gold operations at 14 miles, Kaburi. When there is not an operation there is no taxes.
In some circumstances taking account of the direct jobs and other indirect benefits, countries may even find it better to take money from elsewhere and pay some operations to keep going. In the earlier days of tourism in the Caribbean, some countries judged at some times, that it was better for them to pay certain airlines to fly certain routes at certain prices to encourage profitable flows of tourists; judging that the subsidies provided would be recovered many times over from the increased level of economic tourism activity.
Secondly, to ring fencing – starting with a likely counter argument – the Agreement on the Stabroek Block is one lease, a lease entire – one lease: no partitioning, nor ring fencing, no subletting either – no change can be unilaterally imposed. Indeed, back in the late 1990’s, we were looking to and cultivating two other prospective explorers but, in the end, they declined to proceed for any number of reasons. One should also note that the lack of ring fencing (if ring fencing was unilaterally enforceable) facilitates further rapid exploration and development of the field. Yes, it may be argued that it is like us financing further and faster exploration and development of the Stabroek block. That benefits Exxon and benefits us too. As long as there is a certain level of continuing discovery and development, today’s foregone payments would in time be received by us. True, there is the issue of “delayed” payments and the time value of money. Certainly, these considerations quickly become complex and complicated – where lawyers and accountants make their money; but after all of that, a judgement has to be made on what would turn out better for us.
I am hoping that the overwhelming majority of my fellow citizens, within and outside Guyana, would not long linger, captives under the calculated spell of ridicule and disaffection intended, in the emotional interpretation of my words, such as “Sam Hinds displaying astonishing defeatism, calling for us to rejoice over scraps, a paltry sum, a pittance,” US$4.4 billion is not scraps, not a paltry sum, not a pittance; and there is no defeatism, only a greater readiness to come to terms with realties. In 1992, our total GDP allowing for inflation since then, was probably less than US$2 billion even in today’s monies. And pray for patience, these flows from oil are steadily growing much larger.
The last six paragraphs of Peeping Tom merit thorough, explicit, national debate as they express the righteous indignation of us, whose ancestors were the enslaved, indentured and exploited, as we engage with those whose ancestors were the enslavers, indenturers and exploiters; the legacy still keeps them generally, in a stronger position compared to us. Oh, how we wish that, that history could be changed, but it cannot be. What are we to do? As I was writing this with one ear on our President’s speech to Parliament yesterday, some words struck me which seem to align with my inclination. No one is enslaver or enslaved, indenturer or indentured today – in today’s world let us work at making good partners, good friends and influencing them– and if as our late Foreign Minister Mr. Rudy Insinally urges, we could let them have our way, doing what benefits us and them, we may be doing a little exploitation of our own.
I can think of arguments that we, (Mr. Neuell Dennison and I, on our own and on your behalf) were exploiting Exxon a little as we welcomed them and worked at keeping them interested when they came towards the end of the 1990s talking about taking a long shot in the very deep, and very far off our shores.
Sincerely,
Samuel A.A. Hinds
Former Prime Minister/Former
President/Ambassador
