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07/08/2020, 22(11Oil futures - Democracy wins in Guyana and Suriname | The Americas | The Economist
Page 1 of 6https://www.economist.com/the-americas/2020/08/08/democracy-wins-in-guyana-and-suriname
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Democracy wins inGuyana andSuriname
The neighbours’ new presidents have contrastingchallenges
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Aug 8th
2020 edition
The
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07/08/2020, 22(11Oil futures - Democracy wins in Guyana and Suriname | The Americas | The Economist
Page 2 of 6https://www.economist.com/the-americas/2020/08/08/democracy-wins-in-guyana-and-suriname
For five months Guyana has waited to see if thestand-o! between its president, David Granger,
and the opposition would end in violence, a coupor a peaceful transfer of power. On August 2ndpeace prevailed. The Elections Commissiondeclared that Irfaan Ali, the opposition’s candidate,had won the election held on March 2nd. He tooko"ce the same day.
Mr Ali had a minuscule lead on election day, but adisputed tally by the chief elections o"cer gavevictory to Mr Granger. A drawn-out recount andlegal battles followed. It looked as if Mr Granger, aformer army brigadier, was determined to remainin o"ce. He relented under pressure from othercountries such as the United States and Britain, theformer colonial power, plus regional organisationssuch as the Caribbean Community. Independentmedia and Guyana’s private sector lobbied for MrGranger to go. His supporters plan a court #ght, buthave little prospect of success.
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Thetransfer ofpowercomes justas Guyanabegins tocash in onmassiveo!shore oildeposits(see chart).
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07/08/2020, 22(11Oil futures - Democracy wins in Guyana and Suriname | The Americas | The Economist
Page 3 of 6https://www.economist.com/the-americas/2020/08/08/democracy-wins-in-guyana-and-suriname
(see chart).Thanks tothem, theimf
expects the economy to grow by 53% this year. In afew years, South America’s third-poorest country,which has one of the world’s highest rates ofemigration, will probably be one of its richest. Thechance to control the bonanza raised the stakes inthe bitter rivalry between Mr Granger’s mainlyAfro-Guyanese coalition and Mr Ali’s mainly Indo-Guyanese People’s Progressive Party (ppp), whichbegan before independence in 1966. The winnercould hope to stay in power for decades.
It is hard to trust that the new government willspend the oil money wisely. The ppp’s 22 years inpower before 2015 are remembered for corruption(as are the 28 years of rule before that by thePeople’s National Congress, now Mr Granger’sparty). Bharrat Jagdeo, the president from 1999 to2011, still calls the shots in the ppp and is the newvice-president. He chose Mr Ali, a former housingand water minister, as the party’s candidatebecause he could not run. Guyana’s SpecialOrganised Crime Unit has charged Mr Ali withconspiracy and fraud. He denies the allegations,and promises honest management of the oilmoney.
The ppp has said it will dissolve the NaturalResource Fund, set up by Mr Granger’s governmentto receive oil revenue. It is supposed to release themoney into the economy at a rate that does notdrive the value of the currency to levels that wouldmake other enterprises uncompetitive oroverwhelm the capacity of Guyana’s weak
institutions to spend it well. But it is not clear what
the new government will replace it with, or when.
More than $90m, about 2% of last year’s gdp, issitting in a bank account at the New York FederalReserve. An early test of Mr Ali will be whether hebows to pressure to spend much of that money tobail out GuySuCo, the state-owned sugar producer,which is having trouble paying its wage bill. MrGranger’s government had sought to reduce the#rm’s losses by shutting down some money-losing
be its biggestyet
India’s rulingparty replaces amosque with aHindu temple
O!cialeconomicforecasts forpoor countriesare too rosy
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07/08/2020, 22(11Oil futures - Democracy wins in Guyana and Suriname | The Americas | The Economist
Page 4 of 6https://www.economist.com/the-americas/2020/08/08/democracy-wins-in-guyana-and-suriname
#rm’s losses by shutting down some money-losingestates, which contributed to his election loss. MrAli may be tempted to preserve unproductive jobs,mostly held by Indo-Guyanese workers. There arewiser ways to spend the money: on boostinginfrastructure and education and on measures toprotect the country from covid-19, which isspreading alarmingly, and from climate change.That might win over the half of Guyanese who didnot vote for him.
Suriname’s new president, Chan Santokhi, alsowondered whether he would take o"ce afterwinning an election. His period of suspense wasshorter. The vote took place on May 25th, and hewas sworn in on July 16th. The doubt was whetherPresident Desi Bouterse, who has dominatedSuriname’s politics for more than 40 years and wasconvicted last year by a military court of murdering15 political opponents in 1982, would yield power.
He did, but has left Mr Santokhi with a mess.Before leaving o"ce Mr Bouterse gave publicservants a 50% pay rise, which the governmentcannot a!ord. The budget de#cit last year exceeded10% of gdp. Mr Santokhi persuaded public-sectorunions to wait for the pay rise. He has beggedbanks for cash, raised income-tax rates anddeferred payment of a loan taken out last year tobuy a hydroelectric dam.
Suriname, like Guyana, is an emerging petro-power. Apache, an American oil company, and itsFrench partner, Total, announced this year threebig oil #nds o!shore. Others are about to drill.Surinamese may share Guyanese worries over howwell the windfall will be managed. Mr Santokhi is aformer police commissioner and justice ministerbut the new vice-president, Ronnie Brunswijk,seems less strait-laced. He began his career as MrBouterse’s bodyguard, fought a guerrilla waragainst his former boss in the 1980s, and has beenconvicted by a Dutch court for cocaine smuggling.He owns a football club and a gold-miningbusiness.
The oil will not $ow for perhaps #ve years, whichmeans that Mr Santokhi, whose term ends in 2025,
07/08/2020, 22(11Oil futures - Democracy wins in Guyana and Suriname | The Americas | The Economist
Page 5 of 6https://www.economist.com/the-americas/2020/08/08/democracy-wins-in-guyana-and-suriname
may reap as little political bene#t from it as theunlucky Mr Granger. The economy will shrink by5% this year, reckons the imf. Gold may helpbefore the oil money arrives. It accounted for morethan three-quarters of exports last year. Investors’mistrust of the dollar has pushed its global price toa record high.
Dutch-speaking Suriname’s largest ethnic groups,like Guyana’s, are of African and Indian origin. Butits political divide re$ects attitudes to Mr Bouterserather than ethnic identity. He has now left thescene. The #ght over how to spend Suriname’s newriches, when they come, may be less bitter thanGuyana’s. That, perhaps, is Suriname’s real gold.7
This article appeared in the The Americas section of the printedition under the headline "Oil futures"
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