34 The Americas The EconomistFebruary 29th 2020
21junior partner of President David Granger’s
A Partnership for National Unity (apnu), it-
self an alliance of parties. The government
manoeuvred to postpone the election for a
year. That infuriated the pppand has de-
layed many of the decisions that a country
on the cusp of oil riches would be expected
to make.
The campaign has been inflamed by al-
legations that the government mishandled
negotiations with ExxonMobil, which
holds the licence to operate Liza-1, Guy-
ana’s first productive oil well, and others in
the promising Stabroek block. A report this
month by Global Witness, a pressure
group, claims that the deal signed in 2016
by Raphael Trotman, the natural-resources
minister, so favoured Exxon that it made
Guyana up to $55bn poorer than it should
have been. That is 11 times the country’s
gdp. After Exxon wined and dined him, the
report claims, he signed a bad agreement. It
entitles Guyana to a 2% royalty and just
50% of “profit oil”, ie, after deducting the
operators’ costs. Global Witness says the
government’s total take should be at least
69%. Bharrat Jagdeo, a former Guyanese
president who remains the ppp’s most
powerful figure, has said that Mr Trotman
“shafted the country”.
The agreement may be evidence of Guy-
ana’s weak position rather than malign in-
tent. It has a history of unsuccessfully
prospecting for oil that goes back to the
1930s, the government points out. Opera-
tors like Exxon needed big incentives to
keep trying. And Guyana needs help in de-
fending itself against Venezuela’s claim to
two-thirds of its territory, including a big
chunk of its offshore oil reserves. It is fight-
ing Venezuela’s claim at the International
Court of Justice in The Hague, which is due
to hold preliminary hearings in late March.My bodyguards
The real muscle, Guyana believes, comes
from Exxon and its Chinese partner in the
Stabroek block, the China National Off-
shore Oil Corporation. “Our number-one
interest was to get a big bad wolf onto the
shelf,” says Mr Jordan, the finance minis-
ter. In Exxon, whose Venezuelan operation
was acrimoniously nationalised in 2007,
“we found the ideal one”. Rystad, a consul-
tancy, disputes Global Witness’s estimate
of the government’s share of oil. It puts the
government’s take at 60%, in line with
agreements struck by countries with simi-
lar characteristics.
To achieve Singapore’s living standards,
Guyana will need a state that approaches
Singaporean levels of effectiveness. It is
not anywhere close. “Our systems are bro-
ken,” says Mr Jordan. “We can’t even run
the existing spending that we’re doing.”
The government has begun to address
these shortcomings. Guyana’s main de-
fence against petroleum perils is its sover-eign-wealth fund, called the Natural Re-
source Fund (nrf). All the money from oil,
and perhaps from mines and forests, is to
flow into an account at the New York Feder-
al Reserve. To prevent inflation and Dutch
disease—an overvalued exchange rate that
makes other industries uncompetitive—
and preserve the money for future Guya-
nese, the government has devised rules
that restrict the drawdown. In the early
years, when production is low, the govern-
ment will be able to take out of the fund no
more than two-thirds of the revenue that
flows into it. At 102,000 barrels a day, the
imf’s forecast for this year, that would be
about $230m, 18% of non-oil revenue. As
the inflow increases and the fund grows,
the share going to the budget will shrink
but the absolute amount will rise. Mr Jor-
dan rules out borrowing money against ex-
pected earnings, a practice that backfired
on such countries as Ghana.
The principles for spending the money
are in the “Green State Development Strat-
egy”, which tries to reconcile Guyana’s new
status as a petro-state with such goals as
generating nearly all electricity from re-
newable and “clean” sources by 2040.
Some of the cash will need to be spent on
shoring up defences against rising sea lev-
els. But the principles must be translated
into projects. The institutions needed to
implement them with competence and
honesty are in their infancy. Greenery and
prudence could be subverted by politics.
In principle, the pppagrees with those
aims. The green plan builds on a Low Car-
bon Development Strategy introduced by
Mr Jagdeo when he was president in 2009.
On use of oil money, he sounds more cau-
tious than the government. He blasts the
nrflaw, because it gives the finance min-
ister too much power. If Irfaan Ali, the ppp’s
presidential candidate, wins, “we will re-
peal this and quickly replace it with one
that moves politicians away from manage-
ment of the fund,” Mr Jagdeo promises.
Guyana needs a “national consensus” on
how it manages its oil riches, he says. Mr
Jordan wants much the same thing.That is just what the country’s racially
charged politics may prevent. Afro-Guya-
nese remember the ppp’s 23-year rule, until
2015, as a time of corruption and Indo-Guy-
anese triumphalism. Those of Indian ori-
gin hurl similar accusations at Mr Grang-
er’s government, though the afcbrought
more racial diversity to the coalition and
independent observers regard the presi-
dent himself as honest. Rage is especially
intense near the shuttered sugar estates. If
the apnuwins re-election, “people will not
accept the results”, says an official from the
Guyana Agricultural and General Workers’
Union, which represents sugar-cane work-
ers and is linked to the ppp.
The antagonism is made sharper by
Guyana’s electoral system, which awards
seats in the National Assembly on the basis
of proportional representation. After elec-
tions party leaders handpick the politi-
cians who occupy the legislature’s 65 seats,
including the 25 regional seats. They are
thus more beholden to their leaders than to
racially mixed groups of constituents.
The main hope for ending the standoff
rests with mixed-race and indigenous Guy-
anese, whose weight in the population is
increasing. An array of third parties is try-
ing to break the duopoly. Lenox Shuman,
the presidential candidate of the Liberty &
Justice Party, which represents mainly in-
digenous people, hopes to be “the balance
of power and bring reason to the house”.
With more reason and less rancour, Guy-
ana will have a better chance of making the
most of its new riches. 7New guy on the block
Proven oil reserves, barrels per person, ’000
2018Sources:BP;UN;ExxonMobil;RystadEnergy *January 2020CanadaLibyaSaudi ArabiaQatarGuyana*UAEVenezuelaKuwait2520151050T
hunderstorms oftenshow up unin-
vited to Carnival in Brazil. The authori-
ties in Rio de Janeiro used to share meteo-
rological data with a group of spiritual
mediums who claimed to have rain-dispel-
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of an evangelical mayor in 2016.
This year’s attempt to sway the skies
took place in São Paulo as part of a publicity
stunt by the party’s official sponsor, Skol, a
Brazilian beer brand. “The fun stops when
it rains,” says Pedro Adamy, Skol’s market-
ing director. So do beer sales.
Enter a company called ModClima. A
ModClima aeroplane painted with Skol’s
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Tube video that has been viewed 12m times,SÃO PAULO
A beer company tries cloud-seeding to
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