The Washington Times / December 8, 1998
By Larry Luxner
GEORGETOWN, Guyana -- Last month marked the 20th anniversary of a bizarre event that first put Guyana on the map for most Americans: the suicide-murder of 913 religious cultists at Jonestown.
But the anniversary most of Guyana's 775,000 inhabitants really care about has nothing to do with Jonestown. Nearly a year has passed since Dec. 15, 1997, when voters in this remote South American country went to the polls in a presidential election that pitted Janet Rosenberg Jagan of the leftist People's Progressive Party (PPP) against former president Desmond Hoyte of the People's National Congress (PNC).
Mrs. Jagan won and was sworn in, but the PNC -- alleging corruption -- refused to accept the results of the election, and unleased violent street protests throughout the capital city of Georgetown. Although the unrest has since abated, the standoff between Mrs. Jagan, 78, who's supported largely by Guyana's East Indian minority, and Mr. Hoyte, 69, who's backed mainly by the country's African minority, drags on with no end in sight.
Meanwhile, the Guyanese economy shrivels and investors take a wait-and-see attitude before pouring more money into the country.
"Guyana's major problem is the need for new investment," says Shridat Ramphal, a former Guyanese foreign minister and now chief negotiator for the 14-member Caribbean Community (Caricom). "That seems to have been put on hold as investors gauge the political environment."
From 1991 until just a few months ago, Guyana's economy was expanding at the astounding rate of 7% a year -- earning praise from the World Bank, the IMF, the Inter-American Development Bank and regional experts. But suddenly, with fallout from Asia's financial crisis reaching Caribbean shores, the nation's prosperity is in doubt.
The timber industry alone will likely suffer a 35% drop this year, following economic difficulties in Indonesia, Malaysia and other Asian countries that have invested heavily in this sector.
"Asia was our main market for timber. At the same time, cheaper forest products from Asia have been displacing our exports to the industrialized world," said Finance Minister Bharrat Jagdeo, a 32-year-old economist who studied in the Soviet Union.
In addition, Guyana's gold, bauxite and sugar industries also are in crisis due to the scarcity of foreign exchange; only rice exports are expected to improve this year. Mr. Jagdeo concedes that the Gross Domestic Product of this Idaho-sized country shrank 2.4% in the first half of 1998, and will probably end the year with overall growth of only 1.1% -- far less than the 3% growth he was predicting in January.
"I don't think large companies are interested these days in small countries unless there's some product they want very much," said Mrs. Jagan, who this Thursday [Dec. 10] is scheduled to address over 1,000 Caribbean and Latin American business leaders meeting in Miami. "The investments we'll get from the States will come mainly from Guyanese who are coming back. They've expressed interest in everything from hotels and fish-breeding to palm oil plantations."
Despite her lifelong hostility towards capitalism, Mrs. Jagan's government is now preparing to sell off a slew of money-losing state enterprises including a $50 million bauxite conglomerate, national carrier Guyana Airways, a department-store chain and 25 other entities engaged in everything from glassmaking to gas stations.
Nevertheless, the Guyanese dollar is now trading at 157 to the U.S. dollar, an all-time low; some fear it may slide to 200-to-1 within a few months.
"The real problem is not so much the political infighting, but the decline in commodity prices," says Ronald Webster, president of the Guyana Manufacturers Association. "Guyana is 90% dependent on sugar, rice, bauxite, gold and timber. In every single instance, prices have dropped dramatically. Coupled with that, we had El Niņo toward the last half of 1997. That element, I think, has been the biggest contributing factor."
Omai Gold Mines Ltd., owned by Montreal-based Cambior (65%), Denver-based Golden Star Resources (30%) and the Guyanese government (5%), runs one of South America's largest gold mines about 100 miles south of Georgetown. The partnership has invested over $250 million in Guyana since 1991, but it's becoming increasingly worried about gold prices, which have hit their lowest level in seven years.
"It will eventually catch up with us in the long run," warns company spokeswoman Seeta Mohamed. "We have pre-sold some gold at fixed prices, and Cambior, our parent company, hedges gold to get better prices, but we can't do that all the time."
Says Mr. Webster: "I think political problems are probably overblown. We're going through a difficult period because of the weather pattern and commodity prices, and people sitting in the opposition probably don't appreciate the impact these things have." He adds that prior to the election, "none of the political parties were particularly concerned about the impact of commodity prices on the economy."
Guyana's efforts to privatize money-losing state industries haven't scored a success since 1991, when the government sold an 80% chunk of Guyana Telephone & Telegraph Co. to Virgin Islands-based Atlantic Tele-Network for $16.5 million. Since then, ATN has improved service dramatically while boosting the number of phone lines from 13,000 to over 57,000. It's also invested over $100 million in GT&T with revenues largely derived from phone sex, horoscope and other audiotext-based pay services.
Because of new competition from other countries, however, revenue from audiotext has declined 41% in the last 12 months, forcing ATN to seek a dramatic rate increase in the cost of basic service, now less than $2 a month. But Cornelius B. Prior J., the company's chief executive, says the Jagan government won't let it raise tariffs to around $5 a month.
"The absence of foreign investment in Guyana has nothing to do with the price of rice. It has everything to do with how Guyana treats its investors," says Mr. Prior. He complains that on several occasions, he's discussed with Mrs. Jagan the idea of opening a data-processing center in Guyana -- a move that could create several hundred jobs while taking advantage of the nation's English-speaking population and low wages -- but that "nobody is willing to talk to me about a tax break."
Mr. Hoyte, pointing to Mrs. Jagan's Marxist past, says that while president from 1985 to 1992, he introduced free-market policies injected new life into Guyana's stagnant economy. That stopped, he said, with the 1992 inauguration of Cheddi Jagan as president.
"Since 1992, there has not been a single major new investor in Guyana -- no new ATN, no new Omai," he said in an interview. "There is no way the economy is going to pick up, because the investments are not coming in, commodity prices are low, and the forestry sector is in depression. If I were president, there would have been more investment in the economy. They still believe in a regulated economy."
Mrs. Jagan, a Chicago-born Jewish grandmother who views her presidency as a continuation of the legacy of her late husband, Cheddi Jagan, says she doesn't believe investment has necessarily been scared away by political unrest.
"We had a joint venture to sell Guyana Electric Corp. and were nearing completion of a deal with [Canadian utility] SaskPower when they were frightened off by the riots, so they say. Whether it was true or not, we're not sure -- but no one else went away," she said. "Since then, we've concluded an agreement with another company. It would be unfair to say the country going to the dogs economically. We're expecting approximately 1% growth this year, which is bad. But a little country like Guyana is bound to feel the repercussions of the world situation."
Meanwhile, Caricom, which happens to be headquartered in Guyana, recently appointed a special mediator to iron out lingering differences between the warring parties. For the past two months, the former attorney general of Barbados, Maurice King, has been meeting with both the PPP and the PNC in a bid to prevent a repeat of the violence that broke out last December, following an election in which Mrs. Jagan's PPP won 53% of the vote, compared to Mr. Hoyte's 45%.
But the PNC is unhappy with the slow pace at which the talks are proceeding.
"We have made virtually no progress with the dialogue," Mr. Hoyte said. "Nothing concrete has come out of it, and our own view is that the PPP has not entered the process in good faith."