The Minister of Foreign Affairs, Carl Greenidge, issued a statement in response to an article of August 5, published in this newspaper, concerning China’s Belt and Road Initiative. That response by the Minister has done nothing to assuage the fears that Guyana is blindly entering into this arrangement in the same way as the PPPC was lured into an agreement with China after a top Chinese official came waving a fistful of dollars during an outreach within the Caribbean.
The Kaieteur News has been carrying out a public service by pointing out the problems which other countries have been experiencing after having signed on to the Belt and Road Initiative. Sri Lanka, for example, has found itself in a debt trap; Pakistan is facing serious financial problems as a result of deals it made under the Belt and Road Initiative, and Cambodia seems to be latest victim of what western analysts have described as a debt trap.
Malaysia has now decided to put a halt on projects under the Belt and Road Initiative. Concerns have been expressed about overpricing of a railway link project in Malaysia. The new government is also concerned about the implications of the Initiative for its national debt.
Guyana should not ignore the empirical evidence about the Belt and Road Initiative. Instead of criticizing Kaieteur News, it should use the information being provided to undertake a detailed analysis of the Initiative and to determine whether Guyana should commit to this agreement. At the best, the Belt and Road Initiative has had mixed successes internationally. It is therefore not a sure-shot and all roads seem to lead to China, another way of saying that even in those countries where the Initiative has had moderate success, China has been the major beneficiary in terms of market access and trade.
But Guyana does not need to look internationally to assess the dangers of borrowing from China. That borrowing comes with ‘strings’ attached, including Chinese labour and the use of Chinese construction companies. China is using the Belt and Road Initiative to export construction services and labour.
Guyana has reasons to be concerned. Construction projects in Guyana undertaken by Chinese firms have been plagued with problems. The Skeldon Sugar factory has been described as a behemoth by the government. The Convention Centre has had to undergo costly and major repairs, and delays have plagued road construction projects. Concerns are already being expressed about problems with Guyana’s debt, in light of the increased borrowing which the Belt and Road Initiative will entail. Many Chinese investments internationally have been plagued with allegations of corruption. In light of all these concerns, the China Belt and Road Initiative will only fuel fears that Guyana can revert to once again becoming a highly indebted poor country if the Belt and Road Initiative leads us into a debt trap.
The Foreign Minister’s argument that a Memorandum of Understanding (MOU) is not an agreement is of little comfort. It may not be an agreement, but it is tantamount to a serious expression of interest. And that is all that China needs to turn on the charm, something that they are very adept at doing.
Three years have gone by and not a single new major infrastructural project has been realized by the government. It clearly lacks this capacity to develop new projects at this stage. Yet it signed an MOU with a country that will promise to undertake all the necessary studies and to find the funds.
Guyana’s keystone project is to find the resources to build a road link between Linden and Lethem to link it with Brazil. This project has been talked about since the PNCR was in previously in power over 25 years ago. It may no longer hold the same attractions as in the past when Brazil was seeking an overland access to ports in the Atlantic to move goods into the expanding North of the country.
Guyana may no longer have a comparative advantage which would allow for Brazil to use the road for the same purposes that was originally envisaged twenty five years ago. The cost of sea transportation has since dropped appreciably and it has also improved in terms of speed. The nature of trade has also changed, with Brazil targeting trade with other countries for goods produced, not necessarily in Brazil, but in other countries. Guyana, therefore, may be daydreaming about the prospects of a road to Brazil. That ship may have sailed a long time ago. But with China waving easy funds and with the government of Guyana only too willing to prematurely sign Memoranda of Understanding, the old saying that “a sucker is born every day” assumes a timely relevance.
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