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Meanwhile, the state of emergency was extended again in May 1965. In rationalising the need for the state of emergency, Burnham, in particular, utilised the media to create the impression that the PPP was solely responsible for the acts of sabotage occurring in various parts of the country.

At around this time, with plans for an independence conference in London being discussed, Burnham invited the PPP to meet with him and a Government delegation towards the end of June to discuss differences on outstanding issues related to the independence constitution. But just a few days before this meeting was due to be held, the Government ordered the detention of the PPP chairman, Cedric Nunes, and three other senior PPP members at the Mazaruni prison where twelve other PPP members were already being held. In protest against this latest round of detentions, the PPP called off the meeting with Burnham and his delegation.

Voicing its opposition to the latest round of detentions, the PPP accused the Government and the police of not taking preventive action against PNC members publicly known to be members of the of the PNC terrorist organisation. In response, Burnham said that the detentions would be halted only when acts of sabotage and the use of explosives for illegal purposes had come to an end. Two of the detainees, held since the previous year, were eventually released in July.

The PPP also had cause to complain about the independence of the judiciary claiming that many magistrates and judges were intimated by the PNC. Actually, most of the PNC members and supporters charged with terrorism, arson and murder in 1964 were found not guilty when their cases came up for trial in 1965.

Through political pressure, Governor Luyt retired Police Superintendent Lambert, who along with some other police officers, were found not guilty by the Supreme Court for beating Emmanuel Batson, a leader of the PNC terrorist organisation, after he was found with a cache of arms and ammunition in August 1964.

At the same time, the Public Service Commission, packed with PNC supporters, refused to appoint Kassim Bacchus as Chief Education Officer even though he had acted in that position and also in the position as Deputy Chief Education Officer, being the most qualified officer in the Ministry of Education. Instead, the PSC appointed a person above him who was his junior at the Ministry. The government also removed Khemraj Bhagwandin, the officer in charge of the Guyana Office in London, and replaced him with the brother of the Minister of Education. These actions of the Public Service Commission (PSC), done through political pressure, apparently caused some concern within the United Force, the junior coalition partner, for even its leader Peter D'Aguiar, complained in October 1965 that he was not consulted about appointments to the PSC.

Meanwhile, the Government set about its task of improving the infrastructure within the country. Road-building was its main priority, and during June 1965, it received a EC$2 million grant from the United States for its road projects. One month later, the United States pitched in another US$2.5 million grant to build a new terminal at the Atkinson Field international airport.

In the political arena, the PPP was faced with more dissention within its ranks. In April, Sheik Mohammed Saffee had broken the PPP boycott of the National Assembly and continued as an independent member of the Assembly. At the end of June, Moses Bhagwan, the Chairman of the PYO, who was also a member of the National Assembly, made public remarks which were widely regarded as racist in tone. As a result, the PPP on 3 July 1965 suspended him from the Party for a period of six months. Bhagwan and 11 of his supporters in the PPP and the PYO subsequently tendered their resignations on 6 August stating that they felt the PPP could not achieve national unity, independence and socialism for Guyana. Bhagwan, like Saffee, did not resign from the National Assembly where he functioned as an independent member.

Acts of sabotage continued to occur in various parts of the country. A section of the West Coast railway was set on fire at Boerasiri and an empty Government building at Port Mourant on the Corentyne was destroyed by fire. The American consulate was bombed on 24 June and the entire ground floor housing the John F. Kennedy Library was extensively damaged. Three employees were seriously injured. One of them was Shakira Baksh who, two years later, won third place in the Miss World beauty pageant.

Strikes were called by the Guyana Agricultural Workers Union (GAWU) on the sugar estates and there were incidents of cane burning throughout the year. British troops and the Volunteer Force patrolled certain parts of the country and many PPP members and supporters were routinely arrested or harassed. To maintain these acts of repression, the emergency order was extended in July and again in October for another three months.

In September, seven young men who returned to Guyana from Cuba on a Cuban ship, after completing studies on PPP scholarships, were served with a seven-day detention order by the security police. On the expiration of their seven-day detention, six of them were released while the other was placed in detention at the Mazaruni prison. Two of those released stated that they were deported from Cuba and announced they were no longer associated with the PPP.

Both the American and British governments continued to provide more economic support to Guyana. The British government in June announced the approval of EC$1.6 million grant to assist in the building of the University of Guyana campus at Turkeyen. Then in July 1965 the United States made available US$9.3 million for the proposed Mackenzie-Atkinson highway. This was a welcome boon to the government and the building of the 40-mile highway commenced towards the end of the year. In August, the United States provided an additional sum of US$1.7 to assist in the building of sea defence.

In July, the government removed the restrictions on the movement of money out of the country. This control was implemented by the PPP government in late 1961. During the same month, the Government approved the increase in salaries of civil servants in the "super scale" claiming that this would attract highly qualified persons to enter the civil service. This increase was sharply criticised by the PPP and also by many trade unions who complained that the Government was increasing payment for persons earning high salaries when the national minimum wage stood at less than $4 a day. In October, the minimum wage was increased to $4 a day.

Meantime, the Government started its preparations for the up-coming conference in London to decide on a date for Guyana's independence. By this time, many organisations that vehemently opposed independence when the PPP was in Government suddenly became strong proponents with the PNC-UF now in power. Even the youth arm of the United Force, rabid opponents of independence up to December 1964, issued a call for the early independence of Guyana.

The leadership of the coalition partners, the PNC and the UF, met to discuss the form of the independence constitution. The PNC wanted Guyana to become a republic on independence but the UF favoured independence with the Queen of England as head of state. An agreement was finally reached when the two parties agreed that Guyana would become a monarchy on the achievement of independence but would change to republican status a few years later. After this agreement was announced, the Government on 13 October released its draft of the constitution of an independent Guyana.

By the last quarter of 1965, there were signs that the economy was expanding. The Canadian-owned Demerara Bauxite Company (DEMBA) announced that it would build a $2.5 million bridge across the Demerara River at Mackenzie to be used for the extension of the bauxite railroad as well as for vehicular and pedestrian traffic. The company also announced that it would be investing EC$15 million in the production of calcined bauxite.

In October 1965, the National Assembly approved the establishment of the Bank of Guyana as the central bank of the country. Among those appointed to manage the Bank of Guyana were German economist Horst Bockelmann as Governor, and W.P. D'Andrade as its manager. One month later, the Bank issued its first Guyana notes in $1, $5, $10 and $20 denominations. These replaced the Eastern Caribbean (EC) notes which were gradually withdrawn from circulation.

International banking also experienced a boost when the Chase Manhattan Bank began operation in Guyana in October.

In the area of international relations, the British and Venezuelan experts in early November 1965 met in both London and Caracas to examine the records of the arbitration tribunal which settled the boundary between Guyana and Venezuela in 1899. On the eve of the experts' final examination for the year, Dr. Jagan in late October suggested that the United Nations should set up a commission to deal with the issue of the examination of the documents.

It was during November, too, that 33 men, formerly members of the Special Service Unit established the year before, became the first full-time soldiers in the newly formed Guyana Defence Force.

Meanwhile, in efforts to expand Caribbean unity, discussions on a free trade area involving Guyana, Antigua and Barbuda and Barbados began in Georgetown in October 1965. The three Governments agreed that the negotiated agreement would form the basis of a Caribbean Free Trade Area. This agreement was finally reached at a subsequent meeting in Antigua in December, and it was signed by the heads of the respective Governments.