Govt courting poverty traps

A year and a half ago, President David Granger invited the eminent English-Oxford economist Sir Paul Collier and others to brief his Cabinet on utilising the revenues from the Exxon oil. They were accompanied by Sir Sridath Ramphal. Coming in the midst of a firestorm of protest on the nature of the contract with Exxon, many felt the President was attempting to calm the waters with the imprimatur of his knighted guests.
Collier advised “the contract not be torn up”, since there were risks undertaken when there was no certainty about the presence of oil. He advised that now that the area was derisked, subsequent contracts should be more favourable to Guyana. But based on what has transpired here since Collier’s visit, it is rather unfortunate that he did not expand to Granger and his Cabinet on insights he had made in his popular book, “Democracy in Difficult Places”, about new-found oil wealth. As one reviewer summarised:
“Nigeria is a case in point. Its immense oil wealth, which should be used to help the country develop, makes politicians particularly anxious to hold onto office. They employ ever fouler means to do so, and elections thus become little more than organised gangsterism. The violent methods the politicians use become the modus operandi of their period in office, and the whole political system is corrupted.” Collier talks about “the survival of the fattest”. Guyanese are concerned that Government’s high-handed stance on the Natural Resource Fund and Local Content etc. portends a return to the authoritarian form of governance that marked the PNC’s first period of governance between the rigged elections of 1968 and 1985, in which the army was brought out to violently quell protests.
But it was in his earlier (2007) book, “The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It”, that Collier should have been more expansive, since we are in “the Bottom Billion” and desperately need to know what can be done about it.
Collier proposed four structural “traps” in which the ‘Bottom Billion’ may be stuck. First there is the “conflict trap”, such as those that emanate from deep divisions in some countries along lines of race or ethnicity, and where some groups feel alienated from the national patrimony. In such countries, governments have to be very sensitive to violent, fissiparous tendencies, and distribute revenues as fairly as possible, so as not to exacerbate the sources of comparison and conflict. Perhaps if Collier had been briefed about the Government’s precipitate closure of four sugar estates and the firings of 5700 mainly Indian-Guyanese workers outside on their “traditional” base, maybe he would have sounded warning bells. As it is, the Government has intensified its confrontational politics following the NCM.
The second “trap” is the “natural resource trap”, now staring us in the face with the oil gushing, and which Collier did address as adumbrated above. But if he had been thoroughly briefed, Collier surely would have been more sympathetic to the need for directed investments in agriculture: to retain workers who were acclimatised to that regimen, and who could then be redeployed, after oil revenues start to flow, into a more diversified agricultural base.
The third trap identified by Collier is the “governance trap”: of poor policies, cronyism and favouritism etc. that fuel the massive corruption characterising the PNC-led coalition from its inception. If Collier knew about the Jubilee Park, the Pharma Warehouse and Contracts etc., he might have offered additional advice.
While the last “trap”, of being “landlocked”, may not appear to be applicable to Guyana, with our lack of a deep-water harbour, we might as well be the Belgian Congo as far as getting our exports out to the world.
In light of our history, however, Collier may have had good reason not to mention one of his chief recommendations for the “bottom billion” countries like us: that G8 countries should intervene – militarily if necessary – to maintain “stability”.