H@rd Truths by GHK Lall – Partial lifting of US sanctions 

Oct 25, 2023 Features / Columnists, News, The GHK Lall Column

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Kaieteur News – The US has announced a partial lifting of sanctions on Venezuela, with its oil featuring prominently in the relief column.  This long-awaited development has mixed implications for Guyana, which now form the focus and thrusts of this conversation.

First, a lesser number of bona fide Venezuelans may look to here, actually come here for betterment.  By bona fide, I mean non-state infiltrators, with more of them [the genuine migrant] staying home, or returning home; after all, home is home, and there is no place like it.  Just ask me, scars and scorns and all.  Second, though it will take some time, economic stresses in Venezuela should ease, which may (may) lead to a de-escalation in its saber-rattling and not so subtle ratcheting up of tensions.  Political operators would not need to direct the attention and passions of citizens towards Essequiba, as domestic calm spreads.

Of course, the Yankees will be watching closely on how the leadership winds and visions blow there; remember, there is only a partial lifting of sanctions and not their elimination altogether.  The Venezuelans get ideas, and the Americans would have to crack the whip again.  A short leash, it is.  On a related note, American banks and businesses could be pouring in the dough to help lift Venezuela out of the doldrums, which drums up employment, and lead to general improvements in conditions in our neighbor.  In brief, Yankees control the show, hemispheric and more.

Third, I now turn to the easing of US sanctions on oil and gold, per the Miami Herald edition of October 18.  Note that I am focusing on oil alone today.  There are approximately three hundred billion barrels of heavy oil in the Venezuelan oil basins, which was some time ago.  US oil giant Chevron has the technology to process that heavy oil, and leads the pack of majors which would want to be in the Maracaibo, and other action.  The drawback is that the Venezuelan oil infrastructure has taken a beating during the length of the sanctions, and is now in a dilapidated state.

American dollars should be the best positioned to run to the rescue.  It will take a couple of years to get up and running at peak production levels, but I envision that increasing Venezuelan oil supply into the markets could considerably alleviate current supply tightening by OPEC+.  Lest I forget, Venezuela is, indeed, a founding member of OPEC, but the choice before it is simple: wave that OPEC membership card and incur the wrath of the Americans; or get down to business (Western capitalist style), and let gushers of money do their talking for people and country.  OPEC+ can sell all the oil it wants to China and India, and the new Saudi strongman will have to adjust to American shifts and coolness.

Fourth, this is where Guyana comes in, and there is, what I would term, this fractional confluence of circumstances involving oil.  Guyana’s Vice President, Dr. Bharat Jagdeo, has been talking up foregoing current increased oil revenues with an eye on more massive income inflows from oil in the future.  I caution that a few things collide with this carefully knit development from Dr. Jagdeo.  To begin with, putting off emphasizing more oil revenues now for a bigger haul in the future, clashes with his own earlier call for greater production to get ahead of any developments that would undermine the hegemony of oil, and causing more of it to be left in the ground.  More succinctly, produce more now for more now while the pot is hot.  Thus, his new stance of recalibrating his national revenue priorities to years ahead, leaves Guyana at a disadvantage, one which he himself had pronounced upon patiently and repeatedly.

Taking the Venezuelan development into account, it is my thinking that a wrench has been thrown into Dr. Jagdeo’s calculations.  Though likely to be slow in coming, it is a lot of oil to be cascading into the market.  When coupled with the Venezuelan need for cash and goods, both at famished levels, it could lead to a supply glut, and downward pressure on oil prices.  Plenty of cheap OPEC+ oil is heading to points east (China and India), while Europe has had its energy challenges to keep warm and keep moving.  I think this partial easing of sanctions could be the beginning of a rearrangement in America’s gaze and its intensity towards the oil riches of this backyard.  In other words, a remaking of the global oil order.  Just recently, a female American General was speaking profusely about economic and resource assets, even agriculture, in this neighborhood.  Why prioritize elsewhere?

All this could be to the detriment of Dr. Jagdeo’s calculations about x millions of barrels at y price levels, only for the latter variable to be considerably below his estimations.  My thinking, my recommendation and my insistence is that it is better to collect now and deal with later when that comes around.  Supporting planning arrangements should not be neglected, but grab the moolah now.  Maximize revenues now, so that Stabroek News would have no takers to complain about cost-of-living travails.  The easing of oil sanctions on Venezuela just changed the entire commodity clock.  Guyanese would be well served if their government reads that clock accurately.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• GHK Lall, Guyana, H@rd Truths, sanctions, Venezuela

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