Guyana, a country of exponential economic growth to the detriment of Venezuela

Guyana’s oil wealth in the Essequibo Region, claimed by Venezuela, is causing a surprising economic boom, but at the expense of its neighbor. In dialogue with Sputnik, the journalist Marcos Salgado said that this could escalate the conflict between the two nations.

Guyana could achieve a Gross Domestic Product (GDP) growth of 52% in 2022, according to projections by the Economic Commission for Latin America and the Caribbean (ECLAC), while the economies of Latin American countries are experiencing low growth in the framework of the difficulties of the post-pandemic and the repercussions of the Western sanctions on Russia for the conflict in Ukraine.

Read also: Check out our coverage on Guyana

The country, one of the poorest in the region, has become one of the most promising offshore oil industries in the world, to the point that it could reach the highest per capita production in the world, according to a study from the University of Navarra (Spain).

The unusual growth of Guyana “is linked to having found very important deposits, not only of oil but also of gas, offshore, off the coast of Guyana or those of Venezuela,” Marcos Salgado, an Argentine analyst and journalist resident in Venezuela, told Sputnik.

“The oil exploitation that is carried out directly in a part of these deposits is in the projection of the claim area in the Ocean”, known as Guayana Esequiba or Region of the Esequibo, Salgado warned.

The analyst added that the conflict “is closely linked to the U.S.” due to the large participation of U.S. oil companies in the country, where the ExxonMobil company exploits most of the resources of the Stabroek Block in an area that covers about 26,000 square kilometers and It is located 193 kilometers from the coast of Guyana.

According to Energynews, the company has made more than 30 discoveries in that block since 2015. With two operational projects, Liza Phase 1 and Liza Phase 2, that company alone reaches an average of 360,000 barrels of oil per day.

In 2021, tensions between Venezuela and Guyana increased due to military exercises that the former British colony carried out in conjunction with the United States on its shores, something that the Venezuelan government considered a “provocation.”

AN INHERITED CONFLICT

These deposits, confirmed in 2015, revived the boundary conflict inherited from the old colonial powers, the United Kingdom and Spain.

“The conflict was kept very low-key for most of the 20th century, even when Guyana became independent” in 1966, Salgado said, but has now been reignited by new oil discoveries.

Venezuela historically claims the Essequibo Region, which covers some 160,000 square kilometers west of the Essequibo River and has large oil reserves and includes two thirds of the current territory administered by Guyana.

To resolve the dispute, various diplomatic instances sought to set the limits of the sovereignty of both nations, although without success.

The first took place in Paris in 1899 and included the participation of the United States, representing Venezuela, and the United Kingdom, as administrator of the former British Guyana. In this agreement, known as the “Paris Arbitration Award,” it was decided to submit the border dispute to international arbitration.

Years later, Venezuela rejected the final arbitration decision because it was ceding a territory rich in resources to Guyana. The award was denounced by Venezuela before the United Nations (UN) in 1962, for which another instance of dialogue was attempted again.

In 1966, both nations signed the Geneva Agreement to seek a peaceful solution to this dispute.

THE ROAD TO THE BORDER LIMITS

However, Guyana chose to abandon the territorial discussion in the sphere of the United Nations and instead, take the issue to the International Court of Justice. In 2018, it filed a lawsuit asking the court to legally validate the 1899 arbitration award that gives it absolute control over the territory.

In that instance, “the file is advancing despite the efforts made by Venezuela” because the conflict is once again in the orbit of the UN, Salgado said.

“Venezuela insists that the issue has to return to the UN (…) so that the mediation teams and the goodwill officials are reestablished in the UN and thus bring positions closer together,” the analyst explained.

The expert added that, “although Venezuela has had to go to the International Court of Justice to present its position,” which he considered one of the initiatives shared by the entire political sphere of the country, “the United States follows the path of the Court of Justice.”

Given this situation and considering that the disputed area has “a strategic position at the entrance from the Atlantic Ocean to the Caribbean,” the conflict could “be escalating even at the level of the situation in the territory,” Salgado warned.

Added to this are the incidents with vessels owned by oil companies that not only operate in the area but have entered the Venezuelan sea, something that “could happen again.”

For the analyst, the area “could become a focus of conflict to the extent that the negotiation between the U.S. and Venezuela does not advance at a more global level, which is advancing in a blocked way, still with many discussions (…) but to the extent that this does not advance or that the United States even changes its political sign, two years from now, the conflict in Guyana may escalate.”

With information from Sputnik

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