Mr Nigel Hinds in “Guyanese-born entrepreneurs remain true to their obligations unlike ExxonMobil” (Stabroek News Aug 25) raised several apt but controversial issues, some of which need a response. He advocates economic nationalism, seemingly invoking it to give a pass to local businesses sanctioned for corruption while also calling for better opportunities for the poor who make up more than 40% of the population. Corruption severely limits opportunities for the poor.
Every country engages in political and economic nationalism. Nationalism within limits is acceptable. Extreme nationalism harms a country as it drives away capital and does not feed hungry bellies or lead to rapid economic development. Burnham’s extreme nationalism bankrupted the economy. Countries that have experienced rapid development in recent decades, including China and India and the Asian tigers, did so because of capitalism and not economic nationalism — attractive, favorable terms of investment.
Hinds asked if Burnham, Jagan, and Hoyte would have acquiesced to (foreign) sanctions on local business persons over corruption. Neither Burnham, Hoyte or Jagan would have objected to enforcement of sanctions on the egregiously corrupt. Why would a government or its leader resist sanctions and indictment of corrupt businesses or persons? It would be akin to condoning corruption. At any rate, the Americans bringing the corrupt accused to justice would relieve Guyana of the expense of forensic investigation and prosecution. One should note that the extent and amount of corruption that existed during the dictatorship was relatively small when compared with the volume of money pilfered from the treasury over the last decade.
It was reported that Burnham regime was corrupt, but the ruler exercised relative control on corruption although he never indicted anyone for stealing state wealth. Jagan had zero tolerance for corruption. Hoyte sought to end corruption and also sold off state assets; he denationalized state corporations. Thus, foreign sanctions against the corrupt during the presidencies of the above were not necessary. Also, the Americans only recently started going after corruption after enactment of the global anti corruption Act. Corruption poses a grave danger to democracy, and therefore, sanctions against the corrupt should be welcomed. Hoyte, Jagan, and Burnham would have endorsed sanctions against the corrupt. The Americans are not sanctioning all businesses but only those that have been tied to run away acts of corruption in cahoots with crooked government officials. Jagan, a man of incorruptible honesty, most certainly would have supported such action. It is noted that USA government has not only sanctioned Guyanese business persons and businesses but corrupt government officials also. Would American hands off approach been better for Guyana?
Hinds unjustifiably attacked Exxon and other multinationals when comparing them with alleged corrupt Guyanese businesses. He states that the amount of revenues earned by Exxon and other multinationals from oil dwarfed the amount of money looted by Guyanese companies from the treasury, adding that the latter businesses have created thousands of jobs for Guyanese and paid large amounts of taxes. It is not fair criticism. Exxon has also created thousands of jobs and contributed revenues to the country that was never imagined making it possible to expand infrastructure development and to fund educational and health programs, and to tackle widespread poverty. Exxon’s creation of jobs has led to collection of huge amounts of revenues from payroll and sale taxes and from the spread effects in the circular flow of money.
Mr Hinds is a businessman and would know that businesses invest money with an expectation of the highest rate of return. Exxon invested a huge of amount of capital (billions of American dollars) in Guyana exploring for fossil energy; it was a very risky investment at the time with no guarantee of a return on investment. There was a pre exploration agreement, and after oil was discovered another agreement that the government negotiated and signed authorizing Exxon to develop blocks. Perhaps it was more favorable to Exxon than to the government; that is the nature of a risky investment. Both sides agreed to it. It would not be fair, therefore, to attack Exxon when both sides reached an agreement. It is also anti business to attack an investor for seeking the best terms for its risky investment. Exxon could have walked away from exploration and production during negotiations if the terms were not acceptable. Would Guyana have benefited in such an eventuality? Exxon and government must have felt that the terms agreed upon were workable at that time. Exxon hit oil! The company and the government have benefited enormously. The revenue from exploration and production of oil have enriched the nation; government has used that revenue in multiple projects, and some local companies, not all, are barefacedly siphoning off some of that money.
Regardless of the behavior of foreign MNCs on the favorable terms of investment, one must not excuse the behavior of local thieves who rape the treasury. They are stealing from the nation, from the poor and from the future of our children whose lives we all seek to improve. And since the local police and the government can’t uncover evidence to prosecute the corrupt, then it behooves the nation to support the Americans for taking the initiative to sanction the corrupt. The government should encourage the Americans to sanction all the corrupt, not just some of them, and undertake additional measures like indicting and prosecuting the sanctioned corrupt and confiscating assets that should be returned to the treasury.
Economic nationalism and patriotism must not be an excuse to close eyes to corruption. The country is reminded what happened to Guyana during the 1970s and 1980s era of economic nationalism; investors avoided Guyana and the country became bankrupt with among the highest per capita debt leading to mass migration. Hoyte and Jagan moved away from economic nationalism and offered very friendly terms to foreign investors. One is also reminded that corruption militates against the poor to uplift themselves and of becoming like the elite of Pradoville. One must also note that without Exxon money, Guyana would not be growing at the current pace. Also, Exxon is great for national security of Guyana. Without the presence of Exxon and its huge investment, USA would not have had much interest in deterring Venezuela’s incursion into Guyana.
It is in Guyana’s interests to offer favorable terms of investment to attract foreign capital, especially from ABCE countries, that will serve as a deterrent against Venezuela’s threat. Attacking multinationals like Exxon does not serve national interest. Local investors should also get favorable terms to encourage entrepreneurship.