Research spotlight: more resource extraction for elusive development?

John highlights the history that mainstream discourse fails to, and it is eye-opening.

Can oil be used to ‘develop’ Guyana? This has been the big question ever since the nation’s first reserves were discovered back in 2015. International mainstream commentators have pondered whether Guyana will experience the ‘resource curse’. The bogeyman of natural resource wealth. Dissonance between a new large-scale oil production operation on the one hand, and the need for sustainable development amidst climate change on the other, has also turned heads.

Guyana: myth of capitalist resource extraction as development by Tamanisha J. John (2024) intentionally avoids parroting these prevailing narratives. It is not that she deems such perspectives irrelevant. Rather, she finds the purported oil-funded development of Guyana is not what it seems. It is capitalist resource extraction in disguise, likely to perpetuate underdevelopment. To get the full picture, much more requires our attention. Starting with the past.

For John, it is imperative to first acknowledge the nature of development. The concept itself, she argues, is commonly viewed as neutral and progressive, with minimal critique of its present widespread framework. Yet, it is intrinsically capitalistic and exploitative. Inviting developing countries like Guyana to court foreign capital and producing a reliance on overseas investments for economic growth. Thus, development frameworks and policies have enabled developed capitalist states to sustain a global situation of dependency, masquerading as development.

Foreign domination

For those not easily convinced, John offers several examples deriving from Guyana’s colonial and independence periods (here she effectively enlists supporting research from Canterbury (2016) and Thomas (1984, 1988)). Both periods, she states, have been fraught with the foreign domination of Guyana’s main export industries, concentrated in the natural resources sector. Meanwhile, “Guyanese find themselves continually dehumanized and discarded in ‘development’ schemes which prioritize resource extraction”.

Take the use of comparative advantage, which was implemented across the Caribbean during colonialism through specialisation in natural resource extraction. Justifications for this were the need to access foreign capital and markets, and secure profits. By the 1970’s, the bauxite-alumina production of independent Caribbean states, including Guyana, were controlled by a handful of American and Canadian corporations. However, there was little generation of “employment, tax revenues and foreign exchange for the region”.

Sustained foreign dominance despite Guyanese rule was demonstrated in the 1970s. President Burnham was helped into power by the US and UK to remove the democratically elected Marxist-Leninist, People’s Progressive Party (PPP). He nationalised the bauxite industry but this was achieved through loaned debt – not expropriation. Therefore, the nationalisation of bauxite (along with several other industries) did not reduce levels of foreign control. When Guyanese protested to remove foreign capital due to a lack of investment in the country, Burnham “could not upset the mandates of foreign capitalists”.

The late 1980s and 1990s saw Guyana’s adoption of International Monetary Fund (IMF)/World Bank structural adjustment programs (SAPs), under a re-elected PPP. Described by Canterbury as “sponsored by Canada”, SAPs reversed Burnham’s nationalisations in favour of privatisation. He adds, “in hindsight the reality was that the Canadian government represented the interest of Canadian extractive capital in Guyana”. Canadian-owned venture, Omai Gold Mines Limited, emerged as Guyana’s largest gold miner. Ultimately, under SAPs, favourable legislation for foreign entities expanded their power and profitability. However, the standard of living for Guyanese declined, quantified by “increased malnutrition rates, high food costs, [and] unemployment”.

John does see some good in all of this: the opportunity for unity. A result of the shared experiences Guyanese face versus “foreigners in oil”.

Elusive development

How is Guyana’s development past reflected in today’s oil industry? John presents even more examples showing how history is repeating itself. Once again, foreign capital is disproportionately benefitting from resource extraction and, once more, it is at the expense of Guyanese. This will result, she says, in the country’s “elusive development”.

For one, there are the arrangements between the government and ExxonMobil (Guyana’s biggest oil producer). Their production sharing agreement is notoriously unfavourable to Guyana. So much so, that it has been subject to international scrutiny. The government originally granted ExxonMobil a permit for 23 years, despite Guyana’s Environmental Protection Act limiting permits to 5 years at a time. ExxonMobil has also been operating on 2 million acres more than is granted under its permit.

Furthermore, there has been a disregard for the health and environment of Guyanese people. Despite being a legal requirement of its oil extraction permit, ExxonMobil did not have insurance in place to cover potential oil spills. This was later challenged in a lawsuit by two Guyanese citizens, with the court ruling in their favour. Some Guyanese have also had their land rights dismissed by the government to accommodate oil pipelines, without compensation. Their complaints have been met with accusations they are “undermining potential ‘development’”.

Lastly, the oil sector initially did not employ any locals. This eventually changed but local workers later reported experiencing exploitative and precarious working conditions, leading to protests. A 2022 survey also found most Guyanese were disappointed by “the failure of the oil revenues to positively impact the lives of the working class”.

One Guyana?

John does see some good in all of this: the opportunity for unity. A result of the shared experiences Guyanese face versus “foreigners in oil”. She mentions her most recent visits, where she observed less conversations about historical divisions (i.e. ethnic or regional) and more about perceived benefits enjoyed by foreign oil workers, at the inconvenience of Guyanese.

It is a hopeful conclusion to emerge from a dialogue depicting how the risks of oil extraction have not sufficiently benefitted Guyana. This nuance alone is good enough reason to read John’s article. It should be a staple for anyone wanting to understand Guyana’s complex reality of extractives and development.

Reference: John, Tamanisha J. 2024. Guyana: myth of capitalist resource extraction as development. The Extractive Industries and Society, 17 (2024), 101416.

Featured image credit: Cottonbro Studio.