FOR FIVE Guyana waited to see if the standoff between its president, David Granger, and the opposition would end in violence, a coup or a peaceful transfer of power. On August 2, peace reigned. The Election Commission said Irfaan Ali, the opposition candidate, won the March 2 elections. He took office the same day.
Mr. Ali had a minuscule lead on election day, but a contested tally by the Chief Electoral Officer gave Mr. Granger the victory. Endless recount and legal battles followed. It seemed that Mr. Granger, a former army sergeant, was determined to stay on. It gave in to pressure from other countries such as the United States and Britain, the former colonial power, as well as regional organizations such as the Caribbean Community. The independent media and the Guyanese private sector have pressed for Mr. Granger to leave. His supporters foresee a legal fight, but have little chance of success.
The transfer of power comes just as Guyana begins to cash in on huge offshore oil fields (see graph). Thanks to them, the IMF expects the economy to grow 53% this year. In a few years, the third poorest country in South America, which has one of the highest emigration rates in the world, will likely be one of the richest. The chance to control the windfall raised the stakes in the bitter rivalry between Mr. Granger’s predominantly Afro-Guyanese coalition and Mr. Ali’s Indo-Guyanese People’s Progressive Party (PPP), which began before independence in 1966. The winner could hope to stay in power for decades.
It is hard to believe that the new government will spend oil money wisely. the PPPThe 22 years in power before 2015 are marked by corruption (just like the 28 years in power before that of the National People’s Congress, today Mr. Granger’s party). It is again Bharrat Jagdeo, president from 1999 to 2011, who is pulling the strings of PPP and is the new vice president. He chose Mr. Ali, former Minister of Housing and Water, as the party’s candidate because he could not stand. Guyana’s Special Organized Crime Unit has charged Mr. Ali with conspiracy and fraud. He denies the allegations and promises honest handling of the oil money.
the PPP said he would dissolve the Natural Resources Fund, set up by Mr. Granger’s government to receive oil revenues. It is supposed to release money into the economy at a rate that does not raise the value of the currency to levels that would render other businesses uncompetitive or exceed the ability of Guyana’s weak institutions to spend it well. But we do not know what the new government will replace him with, or when.
Over $ 90 million, about 2% of last year GDP, sits in a bank account at the New York Federal Reserve. A first test of Mr. Ali will be whether he gives in to pressure to spend much of that money to bail out GuySuCo, the state-owned sugar producer, who is struggling to pay his payroll. Mr. Granger’s government had sought to reduce the company’s losses by closing certain loss-making areas, which contributed to its electoral loss. Mr. Ali may be tempted to keep unproductive jobs, mostly occupied by Indo-Guyanese workers. There are smarter ways to spend the money: by strengthening infrastructure and education and taking action to protect the country from the alarmingly spreading covid-19 and climate change. This could win over half of Guyanese who did not vote for him.
Suriname’s new president, Chan Santokhi, has also questioned whether he will take office after winning an election. His period of suspense was shorter. The vote took place on May 25 and he was sworn in on July 16. Doubt was whether President Desi Bouterse, who dominated Suriname politics for more than 40 years and was convicted last year by a military court for the murder of 15 political opponents in 1982, would cede power.
He did, but left Mr. Santokhi with a mess. Before stepping down, Mr Bouterse gave civil servants a 50% pay rise, which the government cannot afford. Last year, the budget deficit exceeded 10% of GDP. Mr Santokhi persuaded the public sector unions to wait for the increase in wages. He asked the banks for money, raised tax rates and deferred payment on a loan taken last year to buy a hydroelectric dam.
Suriname, like Guyana, is an emerging petro-power. Apache, an American oil company, and its French partner Total, announced three major offshore oil discoveries this year. Others are on the verge of breaking through. Surinamese can share Guyanese concerns about the quality of windfall management. Mr Santokhi is a former police commissioner and justice minister, but the new vice-president, Ronnie Brunswijk, seems less strict. He started his career as a bodyguard for Mr Bouterse, led a guerrilla war against his former boss in the 1980s and was convicted in a Dutch court of cocaine trafficking. He owns a football club and a gold mining company.
Oil won’t flow for maybe five years, which means Mr Santokhi, whose term ends in 2025, may derive as little political benefit from it as the unlucky Mr Granger. The economy will shrink by 5% this year, estimates the IMF. Gold can help before the oil money arrives. It accounted for more than three quarters of exports last year. Investors’ mistrust of the dollar has pushed its world price to an all-time high.
The largest Dutch-speaking ethnic groups in Suriname, such as Guyana, are of African and Indian origin. But his political divide reflects attitudes towards Mr Bouterse rather than his ethnic identity. He has now left the scene. The struggle over how to spend Suriname’s new wealth, when it arrives, may be less bitter than that of Guyana. This may be the real gold of Suriname.■
This article appeared in the Americas section of the print edition under the title “Petroleum Futures”