New York Times slams Guyana as too “corrupt” and too “slow” to manage oil find

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ExxonMobil's Deepwater Champion oil exploration vessel discovered massive reserves of oil offshore Guyana

By Youri Kemp
Caribbean News Now associate editor
[email protected]

NEW YORK, USA – A New York Times article has slammed Guyana as corrupt and ill equipped to handle its offshore oil discovery.

In a lengthy piece by NYTimes journalist, Clifford Krauss, points to Guyana being the epicentre of the next big oil boom, but cautions stakeholders against the systemic corruption, lack of strong country systems and a slow private sector that lacks innovation, and how it may make any finds less than beneficial to the citizens of Guyana.

Krauss writes: “If all goes well, one of the poorest countries in South America could become one of the wealthiest. Suddenly the talk of Georgetown is a proposed sovereign wealth fund to manage all the money, as if this were a Persian Gulf sheikhdom. A vast majority of college-educated youths emigrate to the United States or Canada, while those who stay behind experience high rates of HIV infection, crime and suicide.”

Krauss also described a lack of true optimism in people he interviewed in writing the article on the likelihood of the Guyanese government, headed by President David Granger, along with the minister for natural resources, Raphael Trotman, producing anything of quality with regard to shepherding the country to a successful oil-based economy.

“But there are obstacles. If history is any guide, countries that discover oil often waste their opportunity, as the resource blends seamlessly with corruption. Countries with weak political institutions like Guyana are especially vulnerable,” he wrote.

With regard to countries with large natural resource deposits paradoxically not being able to manage these resources effectively for profit and benefit of its citizens is not a new phenomenon he suggested. There is a wide range of literature on what economists and political scientists term as “Dutch Disease” or the “paradox of plenty” or the “resource curse”.

The Financial Times defines Dutch Disease as “the negative impact on an economy of anything that gives rise to a sharp inflow of foreign currency, such as the discovery of large oil reserves. The currency inflows lead to currency appreciation, making the country’s other products less price competitive on the export market. It also leads to higher levels of cheap imports and can lead to deindustrialisation as industries apart from resource exploitation are moved to cheaper locations.”

In fact, a case of Dutch Disease has been exemplified in Guyana’s neighbour, Venezuela, a country with the largest oil reserves in the world.

However, Venezuela has not been able to export its oil, or take advantage of rising oil prices due to systemic corruption, lack of proper management of resources. This has led to sanctions by external trade partners, in addition to the accrued benefits of the oil resources not trickling down to the general citizenry the way it was envisioned.

Venezuela is also simultaneously going through a massive humanitarian crisis, inflation is pegged to reach one million percent this year, in addition to oil rigs being shut down — an estimated 15-plus over the course of the last 18 months — and also production showing dramatic signs of decrease as all of these factors take hold.

Venezuela and Guyana have a border dispute working its way through the international arbitration bodies, including the International Court of Justice, which has been ramped up on the Venezuelan side after significant deposits were said to have been found on the Guyanese side of the Essequibo border area — a territory Venezuela claims outright.

Krauss, in his article, pointed to the partnership Guyana has with Exxon Mobil, the oil and gas multinational, which along with Hess, another oil and gas multinational, both of which found what they claim to be the largest oil finds in decades late last year.

As drilling continues, more and more oil deposits, deep under the seabed in the maritime territory of Guyana as currently constituted, are being discovered; drillable and able to be exploited.

Guyana is in the process of drafting legislation on the proposed sovereign wealth fund in order to manage the country’s oil find, but with no firm date for when this Bill will be finalized and brought to parliament.

Along with the lack of faith in the corrupt process, Krauss also indicated that other people he spoke to that are involved in the process, call into question not just current country systems in Guyana, but also the sincerity of the oil legislation overall, the loopholes analysts are asking to be plugged up in the sovereign wealth fund legislation and the failure to establish an open and transparent oil commission to oversee this initiative.

Krauss, speaking with Lars Mangal, president of Totaltec Oilfield Services, a Guyanese based oil safety training company: “The challenges are enormous and shouldn’t be underestimated… We have to overcome nepotism, entitlements, corruption, cynicism and scepticism.”

While Dutch Disease has been a problem with a great deal of countries that have found natural resources, particularly oil deposits, some countries have overcome the rigours of the resource curse, like Norway, and have managed their resources effectively, put the resources in a wealth fund and monitored exchange rate appreciation. This is leading some analysts to claim Norway as having a “clean bill of health” and has overcome the negative effects of its resource find, by and large.

No response has been issued by the Guyanese resources ministry to this article by Krauss and the concerns raised.

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25 COMMENTS

  1. Quote responsible, intelligent and objective journalists not this poor excuse for one. I’m surprised at you.

  2. Very surprised at this journalist, all negative reports on Guyana oil find. I smell jealousy, Guyana has God on it’s side not negative people.

    • Patricia King, is that all you got from this article? So corruption and the other ills in the article are the fault of the writer? I think not. It is folks like you who do not.hold.your governments accountable who contribute to the problem National pride means nothing if your country’s leaders lack capacity to govern. So suck it up and face reality

      • All government are corrupt it’s a fact. The point it they just throw a negative light on our country who hasn’t as yet squandered any oil money. And who is he to determine if the country deserve the money or not; it’s a purchase u buy the item u pay the money u mind ya business let the people of the country say if they don’t like what’s going on or not. Point blank.

    • God is only on the side of truth which is what the New York Times printed. God hates and punishes wickedness, envy, and greed, all of which are rampant in Guyana, a country that should have been one of the richest in the Western Hemiphere because it is so blessed with natural resources save for all the internal corruption, nepotism, patronage, backbiting, thievery, rape, and murder.

  3. It is apparent that the NY Times writer is suffering from the disease of self righteous arrogance and hate, underscored and overshadowed with racism.

    The whole world knows that Americans know EVERYTHING but yet cannot solve its own problems, even after 350 years of unfettered freedom.

    Walk the streets of NYC at night, if you dare. Travel to Washington DC in sight of the White House and the FBI buildings and see illegal drug transactions all around.

    Read the death toll of Chicago’s relentless killings and then review the herion and meth nightmare that plagues the suburbs and rural sectors of white America.

    Survey the statements and actions of America’s President and solicit opinions of him on the world’s stage and see the results.

    So this writer can criticize Guyana ?? Really?? People in glass houses , with dirty windows , SHOULD NOT throw stones.

    I wish the wonderful, strong and beautiful people of Guyana the absolute BEST!!

    Ignore the jealous and hateful dirt spewed by this American and step forward with your blessings.

    • 1. Yes, play the race card because you can’t dispute the writer’s assertions about corruption and other bad stuff in your country.

      2. Yes, change the subject to America as if only Guyanese should be allowed to write about Guyana.

      3. What is jealous or hateful about writing the truth?

      • I think something wrong with ur brain. All Americans does is be in peoples business whether good or bad. The person was trying to point out what the bible said, before u take the splinter from ur neighbours eye take the plank out of yours. Every government is corrupt that isn’t news. Every country suffers from racism. Let the people of the country speak for themselves didn’t need ur input. Where was the bad news about America when Jim Jones came to guyana and kill all them ppl I didn’t hear America full a crazy ppl so relax ya self

    • I’m proud of your comment.. all hate from the time they found out that Guyana have oil.. they are flocking Guyana to make their journalism stories relevant but all they sprew is hate.. thank you so much

  4. PS: Arrogant Americans BELIEVE they know everything but somehow that superior knowledge has NEVER translated into humility, respect for others and good will to all.

    30% of America’s children live under poverty; in the wealthiest nation on Earth. Working people cannot afford health care in this nation that boasts that it has the finest medical schools and health standards in the world.

    And it is a standard practice for many American hospitals to “dump” a sick patient who cannot afford medical care.

    And with over 2, 000, 000 prisoners in correctional institutions , America- this supposedly free and prosperous nation- has more of its citizens incarcerated than ALL nations of Earth combined!

    And these same critics of Guyana spends more money on guns and bombs that it spends on its own children’s education.

    I speak as one who was born and has lived in the US all my life and each and everyday is a challenge to encounter decent people in the US without anger or hate in their hearts.

    Stay true to your Guyanese values and accept the burdens and blessings you stand to interact with.

    • What the hell does any of that have to do with impoverishment of Guyana by its very own greedy and crooked people?

      The New York Times sure touched a raw nerve. Why are you trying to cover up your own county’s sins?

      • What the country’s sin have to do with you do u live here or are u tired of hearing about ur problems in ur country.

  5. Apart from the slander and insults metered out by the New York Times and Mr Krauss toward Guyana and the Guyanese people, which is unacceptable in and of itself and should be condemned, the “Oil deal…” between the government and front-runner Exxon is far worse.
    With the three companies already taking the lion share…., i.e. Exxon 45%, Hess 30% and China’s Nixen 25%, = 100%, what is in it for Guyana? Nothing really. Other than renters’ fees, and some royalties; a measly 2%… not enough to develop the country even at $100.00 a barrel; Guyana so sorry, you’ve been had! Time to head back to the renegotiating table.
    Moreover, isn’t it strange that a week after elections in 2015 then Granger comes into government , Exxon discovers Oil, albeit in a “disputed territory…” ?
    In addition, Exxon in surprisingly rapidity, unseen of and unheard of in oil exploration history, is about ready to extract in just about five years… a task, which usually takes about a decade or more to accomplish? Think about it!
    This is not about “Guyana and Oil find…” in my opinion, this has to be about something else. I wonder… Hmm!

    • A generalization may contain an element or elements of truth but not the whole truth. Critical comment can be made of any government or economy of the world. Guyana is in expectation of great wealth. There is need to assess even disgusting commentary to see whether there are elements of truth. For the sake of Guyana the temptation to retaliate angrily at critical comment may not be the most progressive approach. What needs to guarded against is acceptance of the fallacy, that because mistakes may be made in the management of new wealth, that this is evidence of total inability to manage oil benefits for the advancement of the Guyanese nation. I wish that the NY Times journalist had noted the establishment of the solar farm at Mabaruma despite the oil find. How much more has he not noted? Maybe, Guyanese can show him what he did not see or was not informed about.

  6. The Guyanese media needs to address this horrible rhetoric written by NYT reporter about Guyana. I think it’s degrading and slandering. Is he saying All the remaining youths in Guyana are sucidal and HIV Positive ? The current government is corrupt? WOW!! This is sad ,you will come to someone’s country and shred them apart on the world stage NYT other than lift them up. Guyana is a small third world country and we are on our way to being developed into a bigger and better Guyana. God shed his Grace on Guyana too. Better times lie ahead !!!

  7. By all accounts, it appears as though the ever-present and ominous elements involving the international political economy and its accompanying geo-politics have again reared its ugly head.

    The viewpoint expressed in the NY Times article appears to be yet another means through which the aforementioned forces seek to spread their deleterious rhetoric aimed at causing dissention, distrust and disarray. There is no doubt that corruption exists, everywhere, and one need not look any further than the corruption that is taking place in the US, across the board, as validation of this notion.

    Of note, I believe the author fails, seemingly intentionally, to acknowledge the innate and inherent corruption that is part and parcel of the petroleum industry in and of itself. What I found rather telling is the referene to Venezuela as it relates to the challenges that nation faces, presumably due to “corruption”, meanwhile completely neglecting to even give mention of the nefarious, external influences which are intentionally used to negatively impact that nation, as a result of the insatiable desire to control Venezuela’s natural resources.

    The article by Clifford Krauss fundamentally amounts to nothing more than an attempt, by global forces, to disrupt moves being made in Guyana’s petroleum industry, so as to result in the traditional players essentially gain beyond the proverbial lion’s share of profits to which they are accustomed.

    I an certain that, indeed, measures must be taken to reduce the potential for corruption, yet the high-minded manner in which the NY Times’ article comes across, is undoubtedly unpalatable for those who are keen to the global interests, their intentions, as well as their modus operandi toward dominating others’ resources.

    Best of luck to the people and government of Guyana as they embark on what shall certainly prove to be a critical phase in their nation’s development.

  8. In my view some of the short comings about the management of resources and governance within the political system in Guyana are reasons for us as Guyanese people to be concerned. However as a proud Guyanese and an educator I totally reject the picture the New York Times writer has painted about the youths who reside in Guyana. It seems to me that when many of these persons from these so called more developed countries look at persons from our region, which they refer to as “the third world countries” they only see the negatives of our societies, except our natural resources which they come to exploit. I believe that we as Guyanese need to play a more active role in the governance of our country and its resources and let our voices be heard so as to hold the government responsibe for the management of our country’s resources.

  9. Born Guyanese and still living in Guyana….love my country but also love the truth…….i experience and am living what this article is about. I observe alot of patriotic Guyanese against this article but still not living in Guyana, living in the same USA that they claim is hating and condemning Guyana. Guyanese we need to take from that article the negative and make it a positive instead of play blind

  10. Today I read that, “Krauss told the BBC that the response to his article had been varied and that he would “let the story speak for itself”.
    Says Krauss, “[I] stand by every word, of course…Proud it has spurred an important conversation about Guyana’s future.”
    “Stand by [his] every word…”!!?? You mean like… “Guyana is a watery wilderness…has only three paved roads” etc …Its economy is “propelled by drug trafficking, money-laundering and gold and diamond smuggling… Children…go to school in dugout canoes…and young unemployed college grads who haven’t migrated, experience “high rates of HIV infection, crime and suicide”? WTF… Krauss and the …Times must be talking about another Guyana than the one we know of.

    I suggest that Guyana close the deal with Exxon and Hess, keep Nixen, sue the …Times and Krauss, and call in the Venezuelans to do a joint oil venture…That will surely make more sense for the nation and the region as a whole.

  11. I believe Clifford Krauss is confused his article is a reflection of the current state of his country. In Guyana Krauss we have a saying “Don’t put Your mess on My behind” Now Krauss you are what fake news is all about. Journalist should have some semblance of respectability while doing their work. You must be nuts to write this article saying” while who stay behind experience high rates of HIV infection, crimes and suicide” I am not saying these things do not happen but to write such dribble is laughable. Tell me Mr. Krauss did you check your country’s HIV rates, suicide rates, mass shooting rates, opioid and crack death rates contaminated water death rates. Your country’s rate of corruption and interference in other country’s democratic systems? You guys caused the stock market to collapse in 2008. Who are You? You are talking about Dutch Disease? What about the disease in your country? Let me assure you Krauss every Guyanese at home and abroad knows the issues Guyana has. But come on!!. I am not saying that we don’t have problems and they are large problems, but to make such statements and say you stand by them is the starting of your fake news. Knock it off. Guyana has produced a number of very educated and knowledgeable citizens we will make our voices heard. We are quite capable of reaching out for help and expertise from entities who have our best interest at heart and not the one that benefits only America. You Mr. Krauss need to apologize to the Guyanese people for this pile of dribble, you need to understand that they are many ways to point out short comings without being stupid. You and Lars Mangal may have an idea of the challenges but this is not how you go about pointing them out. I am not saying to sugar coat our issues but do not go about writing crap that is simply not true. Look at the current state of your country them re-write this article, you are from a Developed country with expertise in every area we are a small country that just found some potential of wealth and American journalist have started the propaganda. This is quite annoying.

  12. As Guyanese we have to face some truth here. People from the out side world are coming to these conclusion from first encounter and a bigger picture. Every public office you go to in Guyana you are given dog treatment and you have to bribe for everything even if you are against it and it tour last dime. What more shamefull is up to the high count staff demands a bribes. Police always has their hands out like beggers! And yes the citizens are somewhat responsible. Forget going to the passport office, my poor sister single mother getting out of an abusive marriage …finally getting back on her feet and just graduated teachers training collage were made to pay emigration official over 200.000 dollars for her children passport.NO she is not planning to flee, but that passport is the children constitutional right and she has a court order, but lawless still prevail. There are tooo many greedy people in Guyana, all of them thinking about their own individual interest and not as a nation. If not thiefing, robbery ,bribery and they just have no social ethics.

  13. Then let them leave our oil. It’s like like you open a shop and I come to buy, then I say I don’t think u should get the money cause u will drink it out or smoke it out.

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