A Tale of Two Countries: In Free Market Guyana, the Best of Times, and in Socialist Venezuela, the Worst of Times

It’s a tale of two countries. In the 1970s, Venezuela was the flashy, OPEC petrostate of the Americas. Bolstered by money flowing from the largest oil reserves in the world, Venezuela flooded Miami and New York with shoppers and college students. At home, gasoline was cheaper than water. New highways carried fleets of gas guzzlers.Then, in 1976, the oil industry was nationalized and foreign oil companies were converted into subsidiaries of a new state oil company, Petróleos de Venezuela S.A. In 1998, a charismatic, socialist army officer, Hugo Chavez Frias, was elected president. After his death, in 2013, his protégé, Cuban-trained Nicolás Maduro, took over.The scorecard for 25 years of socialism is abysmal. Oil production has dwindled to 20 percent of 1988 levels. Economic collapse and political dictatorship prompted the largest refugee crisis in the history of the Americas. Almost 8 million people — one third of Venezuela’s 1998 population — walked out. Four years ago, American Airlines ended its flights to Miami from Caracas. Today, no flights link Venezuela and America.Despite travel obstacles, Venezuelans have become the fastest growing Hispanic nationality in America, hitting 700,000 today. In September, Venezuelans displaced Mexicans as the top nationality crossing the Rio Grande on America’s southern border. Ironically, in the two decades after World War II, capitalist Venezuela drew millions of immigrants from war torn Europe.Meanwhile, Guyana, separated from Venezuela by a few hundred miles of jungle, languished as a joke country. After independence from Britain in 1966, the country was crippled by decades of Caribbean socialism. Most high school graduates and almost all college graduates emigrated. Today, Guyana’s population of 800,000 is matched by a diaspora of the same size — Guyanese living in Britain, Canada and America.Now, in a turnaround, Guyanese fill flights from London, Toronto and New York to check out job opportunities at home. Last year, the Guyanese economy grew by 62 percent — the highest growth rate in the world.“Driven by its booming oil sector, the economy is set to expand by 27.2 percent in 2023 and 34.2 percent next year — consolidating the country as the world’s fastest-growing economy in 2024,” S&P Global Market Intelligence said in a report last month.Once suffering a level of poverty on a par with Haiti, Guyana now enjoys the fourth highest per capita income in the Americas, after America itself, Canada, and the Bahamas. Here is a clue to the source: On April 1, United Airlines inaugurates direct jet service between Georgetown, Guyana’s capital, and Houston.On this southern shore of the Caribbean, steel and glass buildings rise between colonial-era, gingerbread wooden houses. What’s the difference between the two countries? It is only a 90-minute flight between Caracas and Georgetown. Yet there are no flights between the two countries.Two decades ago, Guyana, a multi-party democracy, took a free market, foreign investment turn. In 2011, ExxonMobil discovered a series of finds totaling 11 billion barrels off the shore of the Essequibo, a Guyanese region bordering eastern Venezuela.In 2019, production started by a consortium of ExxonMobil, Hess, and China National Offshore Oil Corporation. This block’s reserves of sweet, light crude are so valuable that they are the primary reason for Chevron’s offer this fall to buy Hess for $53 billion. Most of the crude ends up on the West Coast of America.While $2 billion a year will be diverted this year into a rainy day sovereign wealth fund, Guyana’s democratically elected president, Irfaan Ali, is plunging his nation into five years of catch up to make up for decades of socialist stagnation.Oil money is building seven hotels, 12 hospitals, dozens of new schools, a $1.9 billion gas to electricity project, 48 new bridges, two main highways, and Guyana’s first deep water port. From this port, a highway will run 350 miles south, into the Amazon, giving Northern Brazil’s companies and ranches direct access to Miami and the Caribbean.No one worries that Guyana’s checks will bounce. By 2026, Guyana’s oil production is to hit 1 million barrels a day. At that level, South America’s ugly duckling will surpass Venezuela. Measured by barrels produced per capita, thinly populated Guyana is on track to become the Kuwait of the Americas.To critics who say that oil production fosters global warming, Guyanese retort that the world will need oil for the next 30 years, and that oil should come from poor countries. In a reversal of fortune, 30,000 Venezuelans have emigrated to Guyana to work.Watching from Caracas, Mr. Maduro is envious. Preparing for elections next year, he has banned leading opposition candidate María Corina Machado. In a national primary election two months ago, she won 92% of 2.4 million votes cast.Seeking a patriotic campaign banner, Maduro set his eyes on Guyana’s Essequibo. Almost the size of Florida, the Essequibo represents two thirds of Guyana’s territory. Drawing on a 200-year-old dispute between the Spanish and British empires, Venezuela claims the Essequibo.In an 1899 international mediation, the area was almost entirely allocated to what then was called British Guiana. Two weeks ago, Maduro conducted a national referendum on grabbing the Essequibo.Although turnout was low, he declared the 95% yes vote is a mandate. Maduro declared the Essequibo Venezuela’s 24th state, redrew official maps, and said all 125,000 inhabitants of the region are now Venezuelans.He gave ExxonMobil, Hess, and the Chinese state oil company 90 days to re-register under Venezuelan law or to pull out. To further pressure Guyana, he dusted off decade-old seismic studies and invited international majors to bid on blocks in Plataforma Deltana, Venezuela’s offshore reservoir closest to Guyanese waters. Called Plataforma Deltana, the reserve holds 7.3 trillion cubic feet, about 3 percent of Venezuela’s massive gas reserves.On Thursday, Messrs. Maduro and Ali met in a tense parley in a neutral spot — Saint Vincent, the island nation north of Venezuela. Both agreed that their neighborhood should remain “a zone of peace.”By mid-March, the two parties are to meet again, probably in Brazil, which borders both nations. Facing a popular verdict on 25 years of rule by his United Socialist Party, it’s hard to see Venezuela’s dictator backing away next year from his claims on Guyana’s Essequibo.

A Tale of Two Countries: In Free Market Guyana, the Best of Times, and in Socialist Venezuela, the Worst of Times

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