The Curse of Black Gold
The discovery of massive oil reserves off the coast of the tiny English-speaking country of Guyana in South America has many wondering whether those riches will be a blessing or a curse.
Exxon recently announced the discovery of around 500 million barrels more than initial estimates of the offshore black gold, bringing the total to as much as 2.75 billion barrels of oil and gas, the Houston Chronicle reported.
At oil’s current low price of around $47 per barrel, Guyana stands to gain more than $129 billion from that motherlode in the coming years. Pumping is due to start in 2020.
The country’s gross domestic product is around $6 billion. In addition to routine needs like new schools and roads, oil could address some of the ex-British colony’s other dire problems.
Poverty and drug abuse, for example, have contributed to Guyana’s dubious distinction of having the fourth-highest suicide rate in the world, according to the World Health Organization.
These and other concerns are tempering the celebrations over the new wealth.
“Will oil corrupt a small Caribbean state?” read the headline in the Economist.
Former Guyana President Bharrat Jagdeo of the opposition People’s Progressive Party recently called incumbent President David Granger a “threat to democracy” in remarks in New York City, arguing that Granger has been trying to control the judiciary to eliminate checks on his power.
Granger’s ruling People’s National Congress, which ran the country via vote rigging between 1964 and 1992, is fighting the People’s Progressive Party over Granger’s appointee to head the respected election commission that helped keep more recent elections fair. Opponents of the nominee fear he will be partial to the government.
Diamonds, gold, sugar and other industries haven’t turned Guyana around, the Economist noted. Political corruption is rampant. The state sector is bloated. A crackdown on money laundering, graft and drug sales has resulted in a slumping commercial sector because they were the most efficient forms of economic activity.
It would be a tragedy if millions of petrodollars went poof before they could help the Guyanese people. But unless folks like Granger and Jagdeo can come to a meeting of the minds, the country’s oil wealth might not change a thing.