Home' Trinidad and Tobago Guardian : October 31st 2013 Contents The internal politics of
Venezuela is playing a big
part in the sudden deteri-
oration of that country's
relations with its smaller
neighbour Guyana after a
period of steady improvement.
Elements in the military apparatus of
Venezuela appear to be determined to press
a spurious claim to two-thirds of Guyana's
territory. On present evidence, it seems that,
unlike his predecessor Hugo Chavez, Pres-
ident Nicolás Maduro lacks the clout to
There have been two serious actions
taken recently by the Venezuelan military.
The first was on August 31, the very day
that Maduro was paying an official visit to
Guyana to issue with the President of
Guyana, Donald Ramotar, a joint declaration
Armed and uniformed Venezuelan soldiers
entered Guyanese territory with a party of
civilians. One of the civilians, a law student
identified as Ricardo de Toma, is reported
to have said: "We came here to carry out
a civil exercise of sovereignty, but we do
not understand what was Nicolás Maduro
doing there (in Guyana)".
The second military incident is the arrest
and detention on October 10 of a survey
ship used by Texas-based Anadarko Petro-
leum Corporation, which had been granted
an exploration licence by the Guyana gov-
ernment in a southern Atlantic block named
Roraima. Both the Guyana and Venezuelan
governments say that the ship, the RV Teknik
Perdana, was in their territorial waters. The
fact is the ship was in Guyana's territorial
waters which the Venezuelan government
A spokesperson for the Venezuelan For-
eign Ministry is reported by the Venezuelan
Newspaper El Universal to have said that
"Venezuela expresses its profound concern
about the way in which foreign vessels,
authorised by Guyana's government, barge
into Venezuela's territorial waters and exclu-
sive economic zone without permission."
In a previous commentary, I had pointed
out that shortly after Guyana issued the
exploration licence for the Roraima block
on 26 June, El Universal carried a story
claiming that the Venezuelan Navy had
"raised the alarm" about an oil concession
granted by the Guyana government "in front
of the Venezuelan Atlantic front of Orinoco
The unnamed source "revealed that the
Navy was concerned about the way this
issue is being tackled, namely, Venezuela's
claim over the Essequibo and its silence
over multiple actions carried out by Guyana
in the area."
Even earlier, in September 2011, when
Guyana applied to the United Nations to
extend its continental shelf, Venezuela's for-
eign ministry described the application as
an "irregular situation" and said it was
working to protect its maritime rights.
The action by the Venezuelan navy to
detain the survey ship shows a determination
by the Venezuelan military to maintain and
fuel hostility toward Guyana. A subsequent
meeting in T&T on October 17 between the
Guyana foreign minister Carolyn Rodrigues-
Birkett and the Venezuelan foreign minister
Elías Jaua Milano resulted in a stand-off.
They were unable to resolve the issue despite
the formal language in a joint statement
that they "recognised that the delimitation
of maritime boundaries between their two
states remains an unresolved issue and
agreed that such delimitation will require
The effect is that, not for the first time,
through the use of military force, Venezuela
has again stopped Guyana from pursuing
the economic benefits of its territory - both
land and sea. And this is being done on a
basis that has no legal foundation.
In 1899, an Arbitral Panel of distinguished
judges reached a "full, perfect and final set-
tlement" of the border dispute. The issue
was re-opened in 1962 by then Venezuelan
President Rómulo Betancourt for avaricious
and ideological reasons, absolutely unrelated
According to declassified US State Depart-
ment documents, Betancourt professed "to
be greatly concerned about an independent
British Guiana with Cheddi Jagan as Prime
Minister" who he suspected "is already too
committed to communism."
Betancourt is reported in the documents
covering the period 1962 to 1965, as being
"convinced that the area contiguous to the
present boundary abounds in natural
resources". He proposed to both the British
and the Americans that they agree to zone
it for development by private funds from
Britain and the US "under Venezuelan sov-
ereignty". This, he said, would stop "the
danger of infiltration of Venezuela from
British Guiana if a Castro-type government
ever were established". His position was
founded on avarice and constructed on a
cold war ideology that has cast a long shad-
ow over Guyana.
This was the real basis for the Venezuelan
claim, even though Betancourt's govern-
ment's position in the international com-
munity was that the decision of the arbi-
tration was fraudulent. The declassified
documents reveal that neither the British
nor the Americans gave him any encour-
agement or support.
Nonetheless, he pursued it. And, over the
years, nationalist hostility toward Guyana
has been generated and enflamed in
Venezuela on the bogus assertion that the
1899 award was a fraud, despite the fact
that it was accepted at the time and not
challenged for 63 years.
Propagating a false claim
Regrettably, every Venezuelan govern-
ment---until the latter years of Hugo Chavez's
Presidency---has promoted that false claim.
They have done so even in the school system,
so that every child grows up nurtured on
it. The lie is now so all pervasive that even
political leaders who know the truth are
trapped by its consequences. That, in part,
is the dilemma of President Maduro. How
does he break away from this claim to
Guyana without being branded a traitor by
those in the Venezuelan society whose inter-
ests it serves? It is a dilemma which neigh-
bouring countries, particularly Brazil and
the countries of the Caribbean Community
(Caricom), must help him to resolve.
A possibility now opens in proposals (the
details of which are not yet known) from
the UN Secretary-General's good offices
representative over the Venezuela-Guyana
issue, Prof Norman Girvan.
Undoubtedly, Girvan's proposals will be
within the framework of international law
and precedence. They should have broad
appeal to any government that is willing to
bring an end to this controversy that has
hurt the potential economic integration and
growth of Latin America and the Caribbean
as a whole, and that has stood in the way
of wider and deeper co-operation between
Venezuela and Guyana that would benefit
both their peoples.
Guyana's development should not con-
tinue to be unfairly stunted by---nor should
the country have to continue to live under
---the threat of Venezuelan military inter-
The writer is a consultant, senior
research fellow at London University and
a former Caribbean diplomat.
BG24 | COMMENTARY
BUSINESS GUARDIAN www.guardian.co.tt OCTOBER 2013 • WEEK FIVE
The consequences of
ideology and avarice It will not be long till Congress and the White House
start squabbling again about the budget in Washington.
Before they create another artificial debt crisis, however,
President Barack Obama and his Republican opponents
ought to pay some attention to a real one 1,500 miles
to their southeast.
Puerto Rico, an American territory, risks a Greek-
style bust. With US$70 billion of debt outstanding,
the equivalent of 70 per cent of its gross domestic
product, it is more indebted than any of America's 50
states. Puerto Rico is not technically a state, but its
bonds are treated as if it were. Yields on its bonds
have soared as high as ten per cent, as investors fret
that it may be heading for a default.
Like Greece, Puerto Rico is a chronically uncom-
petitive place locked in a currency union with a richer,
more productive neighbor. The island's economy also
is dominated by a vast, inefficient, near-Athenian
public sector. As with Greece, there are fears that a
chaotic default could precipitate a far bigger crisis by
driving away investors and pushing up borrowing costs
for state and local bonds in America's near-$4-trillion
The Hellenic comparison is also helpful, however:
It should show the Americans what not to do.
For decades Puerto Rico has been sustained by
federal subsidies. Its people, far poorer than the Amer-
ican average, get numerous transfers, from pensions
to food stamps. Until 2006 the economy was buoyed
by tax incentives for American firms that manufactured
there. As drug companies took advantage, the territory
became a vast medicinal maquiladora. This tax break
disappeared in 2006, and Puerto Rico's economy has
shrunk virtually every year since.
It has been able to keep on borrowing, though,
thanks to another subsidy: Interest on Puerto Rican
debt is exempt from state, local and federal taxes in
America, making it artificially attractive to investors.
No growth and heavy debt are a toxic combination.
In 2010 Puerto Rico's previous governor tried, but
failed, to boost the economy with tax cuts. His successor,
Governor Alejandro Padilla, has raised taxes sharply
and hopes for a balanced budget in 2016. Puerto Rican
officials insist that their country is solvent -- and, with
some heroic assumptions about future growth and
rising tax revenue, you can get the numbers to add
up.This is where Greece's experience warrants study.
It suggests that austerity alone is no route to solvency
in a chronically uncompetitive economy.
Puerto Rico's priority should be structural reforms
to boost growth, from breaking up monopolies to
reducing red tape. The island scores 41st in the World
Bank's Doing Business index, whereas America is
fourth. Labor costs are too high, not least because the
federal minimum wage, which applies in Puerto Rico,
is almost as much as the average wage. Politicians in
Washington must help, not least by getting rid of crazy
rules that force all cargo between the island and Amer-
ican ports to be carried on American ships.
The second lesson from Greece is that, if debt does
need to be restructured, it is best to do it sooner rather
than later. Greece waited far too long.
America's Congress is unlikely to provide official
loans to pay off private bondholders, as the Europeans
did for Greece. However, America's policymakers could,
and should, ensure that a Puerto Rican debt restruc-
turing is orderly. The federal government could provide
interim finance to assist the restructuring, much as
the International Monetary Fund does elsewhere. Even
the legal details of Greece's bond swap could be a
None of this would be easy even if policy-makers
in San Juan and Washington were bold and farsighted.
The former are pussyfooting, however, and the latter
are not even paying attention.
Expect Puerto Rico's debt crisis to get worse.
@2013 Economist Newspaper Ltd. (Distributed
by the New York Times Syndicate.)
The lie is now so all pervasive that even
political leaders who know the truth are
trapped by its consequences.
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