Sep 14, 2011 News
A US Embassy confidential report back in 2006 said that the long-simmering Guyana-Venezuela border dispute has slowed the pace of bilateral growth between the two countries.
According to the cable sent by the US Embassy in Georgetown, from then Ambassador Roland Bullen, despite President Hugo Chavez’s high-profile visit to Guyana in February 2004, relations between Guyana and Venezuela remain cordial but not close.
The border issue was also seen by the Americans as continuing to undermine Guyana’s development of its resource-rich Essequibo region, to the detriment of Guyanese and U.S. economic interests.
The local US Embassy, however, felt that Guyana back in 2006 was not inclined to push for a
resolution of the border issue because it could “agitate” Venezuela.
In 2010, the United Nations’ Secretary General Ban Ki-moon appointed Caribbean economist, Norman Girvan, to be his Good Officer to the two countries to mediate the dispute.
Venezuela currently claims Guyanese territory west of the Essequibo River, which had been formally awarded to then-British Guiana by an Arbitral Tribunal in 1899. The two countries have been working the issue through the U.N. Good Offices process since 1990, with little forward motion.
The US felt that development of the region’s oil resources was held up by the border situation.
“ExxonMobil, which holds a potentially lucrative concession in the offshore beds that fall within the disputed area, has been unable to cultivate the block, lest it jeopardize its holdings in the BRV (Bolivarian Republic of Venezuela).
Regarding the concessional rate PetroCaribe oil being offered by Venezuela, Guyana has been slow to embrace its neighbour’s offers to the region, including the same PetroCaribe. Historically, Guyana has been wary of Venezuelan petropolitics, as evidenced by Jagdeo’s statement during negotiations of the Caracas Energy Accord in 2000 that Guyana “has always been opposed to petroleum or food-exporting countries using these commodities as political weapons against importing countries.””
Ironically, the American embassy said, fuel smuggling may also undermine the attractiveness of PetroCaribe in Guyana.
“ExxonMobil executives recently informed post (Emabssy) they estimate that 20% of the fuel available on the Guyanese market is smuggled out of Venezuela. Guyana is essentially already accessing cheap fuel from Venezuela–without incurring an additional debt burden–albeit through the informal economy. A lack of GOG capacity to market PetroCaribe fuel may also be tempering Guyana’s involvement in the initiative.”
Regarding the state-owned Guyana Oil Company (Guyoil), Bullen disclosed that the entity had been plagued by mismanagement and scandal, culminating in the ouster of its second managing director in four years in October 2005.
“Among the more scandalous events surrounding the management shake-up was the revelation that Guyoil was unable to account for $85M.”
According to the US cable, following Chavez’s February 2004 visit to Georgetown, President Jagdeo told embassy officials that Chavez had dismissed the claim as spurious and said the dispute was an imperialist issue, blaming pressure from the U.S. and UK in the run-up to Guyana’s independence, for Venezuela’s pursuit of the claim. However, Bullen said, Venezuela showed no willingness to renounce the claim.
News of the Venezuelan National Assembly’s approval of a Chavez-inspired motion to add an eighth star to the Venezuelan flag to represent the province of Guyana in March 2006 made headlines in Guyana, but did not inspire a concerted government response.
“Uncertainty surrounding the border issue has led to decades of missed economic opportunities in the Essequibo region. Among the more high-profile incidents was Texas-based Beal Aerospace’s decision to forego construction of a US$100M rocket launch site along the Waini River in October 2000. While the company ultimately cited declining profitability of the aerospace industry as the cause of its withdrawal of the program–which also encountered substantial political opposition within Guyana–the project received severe condemnation from the BRV Foreign Ministry, which branded the project a “colonialist arrangement” that would provide cover for U.S. military expansion in the region.”
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