Article Summary:
Guyana is a small country in South America with a population of 800,000. A 2015 oil discovery helped launch economic activity, with the country claiming the world's highest GDP growth rate in consecutive years (2022-2023). However, the fast economic growth has shaken the country's government. Its weak democratic institutions, sharp political divides, and deep ethnic issues have been the cause for alarm among international energy investors. Many speculate Guyana will have to fix these problems, or its economy will fail despite the large oil supply. South Africa is used as an example of a country rich in resources plagued by internal problems, coining the phrase "Energy Curse".
However, energy curses aren't the only thing on Guyana's public official's minds. As the discovery of oil brought prosperity, it also brought attention from jealous neighbors. Venezuela shares a border with Guyana, declared in 2023 with the support of its people that they plan to annex Essequibo, a region making up nearly 2/3rds of Guyana's region. And most importantly, the region that conveniently holds the oil deposits was discovered in 2015. This is unlikely to actually occur, as national boundaries were set by a world tribunal in 1899, and Venezuela has no backing on the world stage, not to mention the United States is allied with Guyana; giving it protection from one of the world's largest militaries.
My Thoughts:
Why Venezuela thinks they need more oil, when they have the world's largest oilfield within its own borders, is beyond me. Their economy has been collapsing since 2013, maybe the issue is not the oil capacity or the physical land of the nation. But instead economic policy and sector efficiency. Fortunately for Guyana, its borders have been rigorously defined for over 100 years, and they have the backing of the entire global community; I don't expect Venezuela to press its claims. However, it will be interesting to see how their political landscape develops, and if they will be looked at as another South African and fall victim to the "energy curse", or if it will take advantage of its natural resources and bring economic prosperity to it's people.
The article: https://www.cnbc.com/2024/01/27/how-guyanas-big-oil-boom-turned-it-into-the-worlds-fastest-growing-economy.html
4 comments:
Yes, you can call this an 'energy curse.' While having a new option for trade it also comes with its issues. As you stated internal conflict, restructuring, and cultural issues will be a dilemma for them, but outside threats will also be a major factor. I think the issue with Venezuela is that they believe adding more land, winning a war, and shifting the public eye in one sitting will stop social unrest and give them more leeway and political power. If anything it would be a smart move if not for the backing that Guyana has. However if Guyana wants to survive it will have to sort out all those problems and it will have to do it sooner rather then later.
It'll be interesting to see how Venezuela ultimately ends up acting as well as seeing the United States' response to any actions. I don't believe there's any clear answer or decision as we've seen how murky this kind of situation can be in Africa. I wonder how much potential they have if they had a strong, unified government calling the shots.
Until you mentioned Guyana's connection to the US, I may have believed that Venezuela would have attempted to annex the small country. However, with the eyes on Argentina's current economic crisis, Venezuela may be able to slip under the radar for a little while. Additionally, I am curious to know if the US currently has any stakes in the oil fields of Guyana? Or, if they plan to have any soon.
I think the idea of why Venezuela needs more oil go towards the thought that the country heavily relied in the past decades on the oil revenue. We have seen that they’ve been facing political instability for quite a while now and especially with elction coming up soon, this became a pressing concern, especially depending on their economic strategy. My article was about the Biden's threat to reimpose sanctions on Venezuela's oil industry, which would further exacerbate their dependency on oil revenue.
Post a Comment