Guyana can become like Venezuela

May 14, 2018 Features / Columnists, Peeping Tom

Venezuela’s problems can become ours. Not in the sense that the problems can leak across our borders, but in the sense that Guyana, now on the verge of becoming an oil economy, can be a victim of the same economic turmoil which is now facing Venezuela.
Venezuela, like Guyana, does not lack resources. Venezuela has the largest reserves of oil in the world. But its economy is in tatters because of foreign and local elite domination, lack of diversification and the failure of the state to deliver critical services because of economic sabotage and destabilization.
Venezuela has found itself in problems because it has remained dependent on oil and oil alone. Guyana has to avoid that level of dependence on oil.
For almost one hundred years, this oil wealth was concentrated in the hands of a small oligarchic class which still exerts tremendous influence in the agricultural, manufacturing and, more importantly, the distribution sector of the economy.
Chavez placed emphasis almost solely on redistributing this oil wealth.
He shifted the resources from the rich to the poor. Spurred on by high oil prices, Chavez rolled out extensive social programmes to the poor. He tried to use the state to command control over the oil wealth so that more resources could be devoted to the poor. He also fattened the military on whose support he relied.
But the oligarchic class, aligned to US imperialism, still remained strong because they enjoyed a formidable presence in the distribution of goods and services in the economy. They used that position to sabotage the economy.
The food crisis in Venezuela is not evident among the rich and middle classes in Caracas. These classes are not going hungry or flying out to western capitals. They are sitting comfortable because they still control much of the distribution of goods and services.
They are using this control to ensure they do not go hungry but also to deny the poor food and critical services.
The decline in oil process hurts Venezuela because the price of a barrel of oil on the world market is below the price which Venezuela needs to support the social programmes which Chavez introduced.
When oil prices were high, Chavez did not diversify the economy, nor was he able to break the domination of the local oligarchic class which is now creating problems for his successor Nicholas Maduro.
Guyana is in a similar situation. The non-oil economy is becoming weaker. The IMF says that the economy will grow by 3.8% this year, but much of that growth will come from rice and gold.
Gold production is expected to be dominated by large scale foreign companies, which means that it will impact more on GDP rather than GNI. A fall in rice prices can cause a slump in production in years ahead.
With sugar now on life support, and fisheries and bauxite being affected by external policies, Guyana is likely in 2020 to be too reliant on oil revenues.
And with a small oligarchic class in Guyana which seems to be doing just as well under the present government as it did under the previous, there is no guarantee that the class structure of the economy will change.
The rich will get richer and the poor will remain poor.
Guyana’s economic policies at present lack vision. It is almost as if Jagdeo and his team are running the economy. There has only been a change of faces within the Finance Ministry; the same neo-liberal agenda continues.
The same excuses are made each year for not being able to pay workers a living wage. The practice of imposing salary increases on the public service continues. The public sector investment programme has the same focus and it is the same big contractors who are benefitting.
Oil will come but who will benefit? Oil is in the hands of foreigners and we know the deal that they have struck with the government. And if oil prices should dip below what it is profitable for production, then with Guyana’s 2% royalties, what is going to happen to the economy?
Guyana can end up being worse off than Venezuela is today.

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