Guyana-Venezuela
economic cooperation (1985-1992)
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Hoyte's attention to the territorial controversy
Prime Minister Desmond Hoyte succeeded to the presidency of Guyana after the death of President Forbes Burnham on 6 August 1985. Almost immediately, he placed attention on relations with Venezuela and the territorial controversy. While in New York to address the UN General Assembly, he met on 4 October 1985 with UN Secretary General Perez de Cuellar who expressed satisfaction with the cooperation he was receiving from both Guyana and Venezuela in his attempt to find a solution to the controversy. The Secretary General brought Hoyte up to date with some of the developments so far, including the visits of his representative, Under Secretary General Diego Cordovez, to both countries earlier in the year. He also pointed out that there was need for patience and that solutions would not occur overnight, for there were many interests to be contacted and that great thought had to be put into trying to fashion the modalities for achieving the objectives Guyana and Venezuela had given him.
Shortly after this meeting, the De Cuellar mooted the idea of forming a contact group with representatives from Guyana and Venezuela and three other countries charged with the responsibility of reaching a final border settlement. However, this idea was not followed up apparently because it did not win support from the two principal parties.
At home in Guyana, the opposition political parties urged Hoyte to democratise the country's political system by implementing laws to allow for free and fair elections. However, he refused to bow to these demands, and on 9 December 1985, in general elections condemned internationally as totally fraudulent, Hoyte and the PNC were returned to power with nearly 74 percent of the "votes".
Economic assistance from Venezuela
After Hoyte entrenched himself in power through this fraudulent election, his government moved to further cement relations with Venezuela which by this time were moving on a friendlier plane. Faced with a severe fuel crisis, Guyana in March 1986 started discussions with Venezuela to barter bauxite for Venezuelan oil. Very scanty information about these discussions was revealed to the Guyanese public, except the general terms of an agreement arrived at between the two countries.
By this agreement, both Governments decided to undertake an economic cooperation programme, which included trade in petroleum products and bauxite, and a financial scheme for facilitating the exchange of goods and services.
The arrangement provided for the supply of petroleum products from Venezuela to satisfy Guyana's consumption needs. To this end, the Venezuelan oil company, Maraven S.A., agreed to provide these products to the Guyana National Energy Authority.
With respect to bauxite, the Bauxite Industry Development Company (BIDCO) of Guyana reached an agreement with Interamericana De Alumina C.A. (Interalumina) of Venezuela, under which Guyana would supply directly to Venezuela 100,000 tons of metallurgical-grade bauxite during 1986 and 540,000 tons in 1987.
In relation to the financial aspects, the Venezuelan Investment Fund and the Bank of Guyana negotiated a deposit agreement designed to facilitate these transactions.
PPP views
The opposition PPP, which had initiated the demand that Guyana should seek cheaper fuel supplies from Venezuela, welcomed the trade deal but criticised the secrecy of the agreement and demanded that the details should be presented to the National Assembly.
On the 18 May 1986, the Mirror, portraying the views of the PPP, pointed out:
". . .Guyana in return is to provide Venezuela this year with 100,000 tons of bauxite which will not be problematic. In 1987, however, Guyana has to supply 540,000 tons of bauxite which will be most difficult. This amount has to be sent to Venezuela while the government has to meet other obligations to the socialist countries and North America. The North American market is still important as it provides hard cash for parts and other inputs. Guyana cannot afford to lose that market. There are many countries, China for instance, waiting to take over Guyana's markets. And, of course, Guyana has to pay the former Canadian owners for the nationalisation of the industry.
"Guyana seems not to be in any good bargaining position, given the pricing of the commodities to be exchanged. Guyana's bauxite is being bought by Venezuela at a fixed price while the price for Venezuela's fuel will depend on a formula which could fluctuate. If the price of oil rises then the volume of oil imports will be reduced. And even if the world price of bauxite rises, Guyana cannot benefit from it according to the terms of the agreement."
More information about the terms of the agreement was given by Hoyte during an exclusive interview with the Bahamian newspaper, the Nassau Guardian. In the interview published on 20 June 1986, the Guyanese President, in discussing the agreements reached with Venezuela, declared:
"In fact, the Venezuelans have reactivated a line of credit which we once enjoyed. Presently, the line is in the amount of US$1.2 million, and this had enabled us to start importing some sensitive items which were in short supply, some of which are very important for our production - for example, fertilisers.
"We do expect on the basis of those agreements that in October the ceiling of the line will be increased considerably. . .
"Since we signed those agreements, we have, at the invitation of the Venezuelan authorities, sent a mission (a private sector mission) to Caracas to discuss the possibilities for the lines of credit - specifically for the private sector - and also for examining the possibilities of joint ventures and things like that. . . They will be sending some people here, and we hope as a result of this on-going dialogue, we will be able to identify areas in which we can strengthen our relationship."
Hoyte's idea of joint development
On 26 May 1986, the 20th anniversary of Guyana's independence, President Hoyte announced at a political rally in Georgetown that his Government would enter into joint projects with Venezuela and Brazil. He stated that Guyana would be "pursuing a principle of aligning our resources with their resources for mutual benefit".
This announcement was clearly a rejection of the policy of the former President, Forbes Burnham, who had been consistently pressured by the World Bank to accept joint development of the Essequibo region during an intense period of the border controversy in 1981-83. However, joint development was now being adopted by Hoyte as the main plank of his strategy in his attempt to seek assistance from the International Monetary Fund and the World Bank.
PPP leader Dr. Cheddi Jagan, on 1 June 1986, labelled this economic strategy of joint development as pro-imperialist which would create only an "illusion of prosperity in the beginning" but would not lead to "any permanent solution to the grave economic crisis facing the country". He maintained that Guyana's future and independence would be jeopardised, and he severely criticised the ruling PNC for rejecting the call by the PPP for a political solution in the country and for the formation of an anti-imperialist, socialist oriented course and to develop stronger relations with the socialist and non-aligned countries. He repeated the PPP's position that Guyana could gain much with cooperation with its neighbours. But he argued that this would be of benefit if only the countries of the region "pursue an independent course and not permit foreign capital, which dominates the economies of Latin American countries, to dominate Guyana".
Further economic agreements
The Stabroek News, a new privately operated Guyanese weekly newspaper which began publication in January 1987, reported on 30 January 1987 that representatives of the Guyana and Venezuela Governments were finalising arrangements under which a US$28 million line of credit would become available to Guyana to benefit the public and private sectors equally. The paper declared that it did not know what goods and services would be available under the line of credit, but revealed that a private Venezuelan company, Grupo Kudor de Venezuela, would be assisting the Guyanese private sector to import goods from Venezuela under the line of credit, and would also promote joint ventures.
The executive vice-president of the Venezuelan company, Rafael Viamonte, in an exclusive interview with the newspaper (also on 30 January 1987) announced that his firm would also be assisting private business in Guyana "with the marketing of their products in the European and Venezuelan markets." He was of the opinion that the Guyana Government was encouraging the private sector to become strong, and its support for joint ventures would result in the building of an adequate export market for Guyana.
Viamonte revealed that his company in June 1986 arranged for about 100,000 kilogrammes of Venezuelan tobacco to be sold to the Demerara Tobacco Company, and that further shipments were being arranged. At the same time, Grupo Kudor was promoting joint venture arrangements in the Guyanese lumber and mining sectors. He brushed aside suggestions that the Venezuelan claim to Guyana's territory would have any adverse effect on the on-going negotiations, saying that both countries "have the best relationship now than they have had before."
Hoyte's visit to Venezuela
On Tuesday 24 March 1987, President Hoyte began a four-day visit to Venezuela where he conferred with President Jaime Lusinchi. He also met with members of the private sector whom he asked to invest in Guyana and promised them duty free imports of capital goods and repatriation of profits.
The two Presidents discussed the border issue, and agreed that the two countries, through their Permanent Representatives at the United Nations, should suggest for the consideration of the Secretary General of the United Nations that he should select "Good Offices" as the means of settlement of the controversy. At the end of the visit, the Foreign Ministers of the two countries signed an accord by which the two neighbours would cooperate to combat drug trafficking across the border. The accord also established a Venezuela-Guyana joint commission and implemented a limited agreement to abolish visas for travel by diplomats between both countries.
In relation to Hoyte's visit to Venezuela, the Mirror of 29 March 1987 commented:
"There is no indication as to what aspect of the border row was discussed. The dispute is currently in the lap of UN Secretary-General Dr. Javier Perez de Cuellar. The Guyanese people want this dispute settled speedily and are fed up with the protracted nature of it. Citizens of Guyana would welcome improved Guyana-Venezuela relations with full mutual respect for each other's sovereignty. The secretive nature in which the Guyana government is treating these relations, however, is a source of deep concern."
Refusal to publicise trade agreements
During March 1987, the Guyana Government declared that it had no intention of revealing the terms of the three trade agreements signed in Caracas in 1986 with the Venezuelan oil company, (Maraven), the Interamericana de Alumina and the Venezuelan Investment Fund. In the National Assembly, Jagan in mid-June 1986 asked the Deputy Prime Minister of Planning and Development, Hasyln Parris, whether or not the government would table the agreements in the Assembly. However, it was not until mid-March 1987 that this question was formally answered by Parris who replied: "No, the Government will not make the agreement public." Asked further to give reasons, Parris declared that the agreements were with private companies.
Dr. Jagan strongly opposed the refusal to make the agreements public and insisted that the Guyanese people had every right to know what was done in their name. Further, he added, the initial talks that led ultimately to the agreements with private concerns in Venezuela were on a government to government level, with the Venezuela government arranging for the trade agreements to sell Venezuelan oil to Guyana, for Guyana to supply substantial quantities of metal grade bauxite throughout 1986 and 1987, as well as a deposit agreement to facilitate the trading of oil and bauxite.
Announcement of agreements
Some further information about Hoyte's visit to Venezuela was revealed when the Government in mid-May 1987 finally tabled in Parliament three separate agreements made during his tour. They pertained to the limited abolition of visas, suppression of narcotics traffic, and mechanisms for cooperation between the two states.
The narcotics agreement would remain in force for two years, but would on the expiry of that period, stand automatically extended for an equal period unless either of the two parties should renounce it. The agreement made it binding on the two governments to adopt administrative measures to prevent all activities relating to illicit trafficking in narcotics; for an exchange of direct information on data on the internal situation with regards to trends in consumption and trafficking; as well as the training of maritime customs officials, and in the tracking down of drug traders.
The two governments would also assist each other in the prevention of drug addiction, the treatment and rehabilitation of drug addicts, and the apprehension and confiscation of any aircraft or vessel used for drug trafficking. To establish a regime of control over narcotics, the two countries would undertake to harmonise their respective legislation for this purpose. A mixed commission was also set up for the purpose of fulfilling these objectives.
More information was also given to the nation by the Deputy Prime Minister, Haslyn Parris who, in a special radio broadcast on 1 June 1987, announced some details of the three agreements in 1986 with Venezuela concerning oil, bauxite and trade. This was a complete turn-around in his position, for it was pertaining to these very agreements he had bluntly refused to answer in the National Assembly three months before.
Parris stated that Interalumina of Venezuela would continue to purchase from BIDCO for US dollars whatever bauxite it needed. At the same time, the Guyana National Energy Authority would buy from Maraven whatever petroleum and petroleum products it would require. The Bank of Guyana would pay in US dollars 55 percent of the cost of each shipment. The remaining 45 percent would be deposited in US dollars in the Bank of Guyana by the Venezuelan Investment Fund of Venezuela. This would be paid back to the Investment Fund - a quarter of it within six months and the remaining three-quarters within one year.
The 45 percent repaid to the Investment Fund would be available for the Guyanese public and private sectors to make purchases from Venezuela up to the sum of US$15 million on a line of credit.
Up to the end of May 1987 only US$1.9 was repaid and had already been used to purchase urea, toilet jumbo rolls and other commodities. Parris did not reveal the price being paid for bauxite on the one hand and oil on the other. He declared, however, that although more bauxite was ordered for 1987 than 1986, its value did not cover the value of oil expected to be imported.
Discussions relating to the appointment of McIntyre
Regular contact between the two countries at very senior levels continued, and at a meeting of Presidents Desmond Hoyte and Carlos Andrez Perez in Tobago on 5 August 1989 the Venezuelan President accepted the Guyana proposal to recommence talks on the territorial controversy. He, at the same time, won Hoyte's agreement to the idea that Dr. Alister McIntyre of Grenada should serve as the "Good Officer" of the UN Secretary General. McIntyre had previously served as Secretary General of Caricom, and at the time of his appointment, he worked as Vice-Chancellor of the University of the West Indies. It was apparent that he had already discussed his desire for the position with the Venezuelans.
In September 1989, a representative of the Secretary General met with Guyana's Permanent Representative to the UN, Rudy Insanally, and sought Guyana's view on the proposed appointment by Secretary General of McIntyre as "Good Officer". Guyana, soon after, offered no objection to the appointment.
During the period 7-8 November 1989, President Hoyte visited Venezuela, and he and President Perez held intensive discussions in the eastern city of Puerto Ordaz. At the end of their meeting they announced their acceptance of McIntyre as "the person to perform the role of 'Good Offices' in accordance with the mandate of the Secretary General of the UN under Article IV(2) of the Geneva Agreement." At the UN, Insanally conveyed this information to the UN Secretary General Perez de Cuellar who stated that he was taken by surprise by the announcement of the two Presidents since he had not as yet consulted McIntyre.
Hoyte on the issue of joint development
Meanwhile, the issue of joint development continued to be discussed in the Guyanese media. The editor of the Stabroek News, David DeCaires and Hoyte had the following exchange during the latter's meeting with the press on 10 November 1989 to report on his visit to Venezuela.
DeCaires: At one stage joint development was widely mooted as a possibility for solution of the border issue. . . . Is it likely that will be one of the possibilities to be put before the Good Officer by our side in the talks that will ensue?
Hoyte: Well, you know I like to have my terms defined and I'm not sure what joint development means. If it means a kind of condominium, well, certainly that will not be on the cards - you know, some joint exercise of sovereignty over the Essequibo region or some thing of that kind. I don't know whether this concept of joint development means that.
DeCaires: Do I, sir, take your remarks then to imply that joint development that involves some permanent Venezuelan presence on what is now our side of the border is not a matter for discussion or negotiation.
Hoyte: No, what I'm saying depends on what you mean. Suppose Guyana and Venezuela were to establish a joint company for the establishment of a hydro-power facility, certainly, Venezuelan personnel will be there along with Guyanese personnel just as how, let's say, a private American company operating in this country will have . . . . American managers, and so on. So there is nothing unusual or unacceptable in a situation like that. But what I'm saying is that there had been talk many years ago about joint development. I myself wasn't quite clear on what it meant. All I'm saying is that if it means condominium, you know well certainly that couldn't be on the cards. But we have not put any such proposal to the Venezuelans.
DeCaires: Can we rule out absolutely, sir, any possibility of concession of territory?
Hoyte: Well, at this stage I wouldn't want to close any option. I mean we don't know. You see, there have been cases where controversies have been settled, relating to territory, with what is called rectification of borders - you know, there is a swap. So I mean I don't want to take a fundamentalist position which closes any option at all. I think that would be quite wrong and it would send the wrong signals to our Venezuelan neighbours, and if they took such a position it would send the wrong signals to us. So we go into discussions with an open mind and a spirit of goodwill.
Appointment of McIntyre
At the beginning of 1990, Perez de Cuellar announced that after consultation with both Guyana and Venezuela, he had appointed Dr. Alister McIntyre, regarded as a "friend" of both countries to act on his behalf to find the means of settlement. McIntyre, shortly after, began a series of meetings in Caracas and Georgetown with representatives of the respective governments and subsequently met with the Foreign Affairs Ministers of the two countries in New York in April 1990.
Meanwhile, relations between both Governments continued to rapidly improve, and the media in both countries hardly ever made mention of the border controversy which had whipped up tension during the early 1980s.
Jackson's visit to Venezuela (1990)
On 13-16 June 1990, in response to an invitation from the Venezuelan Minister of Foreign Affairs, Reinaldo Figueredo Planchart, Guyana's Foreign Minister Rashleigh Jackson visited Venezuela. He held discussions of a political and economic nature with President Perez and also with his Venezuelan counterpart. He also met with representatives of agencies relevant to the functional cooperation between the two countries.
In their discussions, both Ministers expressed satisfaction with consultations held with Dr. Alister McIntyre. The Ministers also supported the Guri hydro-electric project for the electrical interconnection between the two countries for which a pre-feasibility study was being conducted. They also reiterated their desire to explore the possibility of obtaining finance for the project from sources including the international financial institutions. (During the meeting with President Perez on 13 June, Jackson stated that Guyana and Venezuela would make a joint representation to the IDB within a month's time. In response, Perez stated that he would speak with IDB President Enrique Iglesias about the matter during the week of 18 June).
Figueredo also declared Venezuela's willingness to construct a gymnasium and the School of Medicine in Georgetown, and announced that actions were already in motion to complete the projects within a short time.
Discussions were also held on trade, aviation and fisheries issues, and both Ministers indicated their governments' interest in promoting join actions through the establishment of companies with capital from both countries. In this regard, Venezuelan participation in the firm Guyana Woods Limited was considered as very important.
In addition, the Ministers discussed the importance of the environment and the need to ensure that there was no obstacle to the sustainable development of the resources of both countries. Jackson took the opportunity of explaining the practical steps being taken by Guyana in promoting a programme for the sustainable development of its forest resources.
With respect to hemispheric issues, Jackson viewed in a positive light the aspiration of Venezuela to join Caricom as an observer. And in the context of the recent revision of Article 8 of the OAS Charter, and the ratification of the OAS Protocol of Cartagena, the Ministers agreed that after December 1990, Guyana would be eligible for membership of the hemispheric organisation. (Venezuela had earlier moved to cement the growing friendship with Guyana when it agreed to an amendment to the OAS Charter to allow both Guyana and Belize to become members of the Organisation. The Charter had previously stated that new applicants for membership which had border disputes with other member countries could not be members. Both countries eventually joined the OAS in January 1991).
At the meeting with President Perez, the subject of the Good Officer process was introduced by Figueredo. Perez suggested that there should be a meeting with McIntyre before his (Perez') planned visit to Guyana later in the year, so that he could have a discussion on the border issue with Hoyte. He felt that the process was moving too slowly and emphasised that a formula must be sought so that a solution could be reached soon. In response, Jackson urged Perez to have confidence in the mechanism agreed upon whereby the Foreign Ministers of both countries had been put in charge of the implementation of the Good Officer process.
On Perez' enquiring about the political situation in Guyana in the light of the up-coming elections, Jackson assured him that elections would not be held before his visit to Guyana and expressed confidence that despite economic difficulties in the country, the PNC would be victorious.
Visit by Perez to Guyana
In mid-June 1990, the Venezuelan Foreign Minister, Reinaldo Figueredo Planchart, visited Guyana and held discussions with Jackson and also with President Hoyte. He also took the opportunity during his two-day visit to finalise the plans for the visit of President Perez to Guyana.
President Perez arrived in Guyana for a two-day state visit on 16 August 1990 and he was accompanied by a high level delegation that included the Foreign Minister and the Minister of Works, Luis Penzini Fleury. At a state dinner held on the evening of his arrival, he was decorated with Guyana's highest national award, the Order of Excellence. In return, Perez decorated Hoyte with one of Venezuela's highest national awards, the Collar of the Order of the Liberator.
In their discussions, the two Presidents expressed their satisfaction with the evolution of events since the appointment of McIntyre to perform the function of "Good Officer". They acknowledged that McIntyre was performing the function in a good political climate, which was in part facilitated by the varied programmes of cooperation between the two neighbours.
They also agreed that cooperation between the Guyanese and Venezuelan private sectors should be further encouraged, and decided to establish a working group to examine the possibility of setting up joint ventures. With respect to trade, they felt that a trade agreement which was being negotiated could significantly facilitate the expansion of commerce between both countries.
There was concurrence on a number of economic cooperation issues and these were announced in a join statement issued at the end of the visit on 17 August.
With regard to the proposed link between the Guri electricity network of Venezuela and the Guyana electricity system, the Presidents noted that technical work on the pre-feasibility study had been completed and that preliminary discussions with the IDB regarding financing were initiated.
In examining cooperation between their countries in the field of health, the Presidents were satisfied that the joint efforts of their two countries to eradicate malaria were proving successful and looked forward to expanded cooperation in this area.
With regard to the contracts between BIDCO and Interaluma, there was a renewed commitment on both sides to further strengthen the existing relationship between the two enterprises, and to fully honour all the commitments contained in the existing contractual arrangement.
The two Presidents also reviewed the question of the supply of petroleum products to Guyana by Venezuela and accepted that as a result of Venezuela's commitment to OPEC it would not be possible to reduce the impact of probable price increases related to such supply to Guyana. They however agreed that some alleviation of the negative effects of price increase could be facilitated by exercising as much flexibility as possible by Venezuela on the question of term and conditions of payment.
Among other matters discussed was the implementation of a programme of cooperation in fishing and fish processing including fisheries research and the exploitation of the aquaculture, land and marine resources.
In addition, they acknowledged the importance of preserving the environment but at the same time agreed that the rational exploitation of natural resources is essential for the development of both nations and committed themselves to the putting in place of programmes of sustainable development as well as joint ventures in the area of wood production.
Electoral defeat of the PNC regime
On the local political scene, the PNC regime continued its grip on political power in Guyana under the Presidency of Desmond Hoyte. However, the opposition forces, led by the PPP, continued to mount an intense campaign in a number of countries, particularly the USA, Britain and Canada, to put pressure on the regime to agree to the introduction of democratic measures, chiefly free and fair elections. At first, the PNC refused to budge, but shortly after former US President Jimmy Carter led a team of members of his Carter Centre to observe the situation first-hand in Guyana, the regime agreed to a number of demands that the opposition had been making for almost two decades. These included house to house registration of voters, a new Elections Commission with an independent chairman, counting of votes at the place of poll, and international observers to watch the poll.
The PNC, despite these agreements, however continued to place impediments in the way of bringing out a speedy materialisation of these rights and deliberately caused numerous errors to appear on the voters' list. This resulted in elections being postponed twice from December 1990 to October 1992, thus ensuring the PNC a further two years of power. At the same time, the regime allowed international observers from only the Carter Centre and the Commonwealth Secretariat.
The opposition parties failed to agree to field a joint slate in the elections. The PPP, however, teamed up with a number of non-political influential persons in the business and professional fields to contest the elections as a PPP/Civic coalition. The final results were that the PPP/Civic won the elections with over 53 percent of the votes. Dr. Cheddi Jagan, the PPP/Civic leader was also elected as President of Guyana in the country's first free and fair elections in over 25 years.
1 August 2008