Georges A. Fauriol and Scott B. MacDonald | April 21, 2022Click to read this article in Spanish Click to read this article in English
Image: The Liza Unity floating production storage and offloading (FPSO) vessel offshore of Guyana. Source: oilnow.gy.
In February 2022, conflict jolted the global economy when Russia invaded Ukraine. While Russian missile salvos, helicopter assaults, burning tanks, and Ukrainian resistance transfixed the world’s attention, policymakers and citizens in many countries soon noticed rising energy prices. Before the Russo-Ukraine War, oil prices headed toward the USD $100 per barrel mark, and natural gas prices remained high while supplies were tight. After hostilities began on February 22, oil prices topped $100 per barrel. Although the Southern Caribbean is far from Ukraine, the region’s energy producers are on the frontline of a global geopolitical realignment. In the decade ahead, the Southern Caribbean is likely to play a much more prominent role on the global energy map, something local leaders will have to weigh carefully.
Guyana, Suriname, and Trinidad and Tobago make up the broader Southern Caribbean energy matrix.[1] While Guyana and Suriname are oil producers, Trinidad is an important natural gas supplier. As Trinidadian energy expert Anthony Bryan observed in 2021, the greater Guyana-Suriname Basin (GSB) is morphing into the “Holy Grail” of new oil discoveries.
Trinidad and Tobago has a long history with fossil fuels, beginning in the mid-nineteenth century, with its early development stimulated in part by the British Navy’s shift from coal power to oil. However, Guyana and Suriname are relatively newer players in the industry, as Guyana’s major oil discovery came in 2015. Although Suriname’s oil industry began in the late 1960s, its 2019 offshore find raised hopes that the former Dutch colony would become a petrostate.
Today major energy companies, notably ExxonMobil, Hess, Apache, Total, and CNOOC are active in the Southern Caribbean, while new buyers are emerging from India, Uruguay, and Vietnam. Marginal links with other countries are becoming deeper and more lucrative, reflecting the persistent demand for oil and natural gas around the world, despite gradually intensifying calls to transition to cleaner sources of energy since the 1997 Kyoto Protocol. Nonetheless, the Southern Caribbean energy matrix has become more important for the following reasons:
The Southern Caribbean and the new Cold War Blues
The emergence of the Southern Caribbean as a major energy producer comes at a time when the global system is shifting into a new Cold War between democratic governments, supportive of a rules-based global order competing with authoritarian regimes that are more oriented to traditional power politics. Prior to the Russo-Ukrainian War, many international observers defined the new Cold War as the growing mistrust between the United States and China, which was deepened by the Asian country’s adroit economic statecraft in the Caribbean (and Latin America, Africa, and Asia). That part of the new Cold War included the use of soft power in the form of educational and cultural outreach by high-ranking diplomatic visits and foreign investment, pushed along by a combination of large state-owned companies and banks.
China’s reasons to increase involvement in the Caribbean include:
China’s entrance into the Caribbean in the first decades of the twenty-first century coincided with fading U.S. interest in the region.[3] Following the end of the original Cold War, Washington’s engagement with the Caribbean (outside of Haiti) declined, while wars in Afghanistan and Iraq refocused its attention. In addition, the 2008-09 financial crisis and the ensuing Great Recession reduced U.S. aid, as did support from other Western countries, like the United Kingdom and Canada. U.S. awareness of China’s diplomatic gains in the Caribbean only materialized later—in Obama’s second term. The effects of the U.S.’s delayed action materialized during the early Trump years when El Salvador and the Dominican Republic dropped their diplomatic relations with Taiwan and embraced China, due to considerable alleged financial inducements.
During the Trump administration, the Caribbean came back into a limited if important focus. While tackling China’s longstanding unfair trade practices by launching a trade war, the Trump administration also brought pressure to bear on the China-aligned states of Cuba and Venezuela. Former U.S. National Security Advisor John Bolton famously branded them (along with Nicaragua) as part of the “troika of tyranny.” Indeed, China, Cuba, and Venezuela shared a strong dislike of the U.S. and wanted to displace U.S. global and regional hegemony. As a result, each suffered under new U.S. sanctions during the Trump years.
As part of the Trump administration’s pushback against China in the Caribbean, the Southern Caribbean achieved strategic importance. ExxonMobil’s 2015 discovery of up to 10 billion barrels of recoverable oil and gas in the Stabroek Block likely influenced this shift. Former Secretary of State Mike Pompeo’s 2020 visit to both Guyana and Suriname, the first U.S. Secretary of State trip to either country, illustrates the U.S.’s growing interest in the region. While visiting, Pompeo stressed China’s predatory lending and vanity projects which saddled countries with unsustainable debt. Guyana and Suriname have also enticed China due to their energy potential and timber. However, China’s Guyanese embassy pushed back, indicating that Pompeo’s comments were fake news and essentially that he should mind his own business.
Equally important in the Southern Caribbean, the U.S. has sought to promote respect for election results and good governance issues in both Guyana and Suriname. Relations with Trinidad and Tobago during the Trump years remained cordial. However, U.S. policymakers worried that the twin-island state remained readily open to Chinese investment and refused to join the United States in its economic sanctions against the Maduro regime—despite a steady stream of Venezuelan refugees and documented human rights abuses across the Gulf of Paria. China’s role in Trinidad and Tobago includes constructing the Brian Lara cricket stadium, refurbishing the St. James police station, the National Academy for the Performing Arts in Port of Spain, and various infrastructure projects (some of them energy-related). Trinidad and Tobago also uses Huawei telecommunications and IT equipment and services, including working to implement its 5G network.
In 2019, Evan Ellis, a research professor of Latin American Studies at the U.S. Army War College Strategic Studies Institute, signaled U.S. concern when he stated, “Trinidad and Tobago’s deepening engagement with the PRC needs to be on the radar of U.S. policymakers in Washington, particularly as the incumbent Rowley government engaged in bombastic rhetoric and positions increasingly unhelpful to the maintenance of security and rule of law in the region—particularly the Maduro regime and its associated criminal actors and armed groups in Venezuela.” The Southern Caribbean felt the effects of the U.S.-China rivalry largely through economic statecraft but also a certain degree of rhetoric. The global realignment of the Southern Caribbean is evident in other ways. These include:
The Southern Caribbean has undergone considerable changes over the past decade. Looking ahead, more changes are coming, both domestically in terms of dealing with a resource curse and externally in terms of navigating a shifting global order.[5] In the short term, the Southern Caribbean is well-positioned to ride through global geopolitical storms. The caveat is the risk of mounting geopolitical pressures in the form of a new Cold War. Escalation will be contingent on whether Russia decides to increase its military profile in the Caribbean (namely in Cuba, Nicaragua, and Venezuela) and if China pushes to re-engage Venezuela in a meaningful fashion and makes new inroads in its diplomatic representation at the expense of Taiwan.
China is very much part of the Caribbean landscape, including in the southern region. It is not going away. A related geopolitical issue is the role of Venezuela, which has a government that has demonstrated an interest in keeping its claims for two-thirds of Guyana alive. While the U.S., Canada, the United Kingdom, and CARICOM countries have clearly rallied behind Guyana, the threat remains.
Heightened global tensions may further energize U.S. diplomacy in the region. So far, U.S. focus in the Hemisphere has centered on the two-tiered autocratic countries: the legacy autocrats—Cuba, Nicaragua, and Venezuela; and those leaning in that direction—El Salvador, Mexico, and Brazil. Elections in Brazil may reverse that while those in Colombia may bring in an opportunistic left-wing regime less sympathetic to the United States (notably on the drug enforcement side of things, which will impact the Caribbean). In a worsening global geopolitical environment, what Washington, Beijing, and Moscow do with their relationships with these governments will require great flexibility from Caribbean governments.
The Southern Caribbean is riding a wave of good fortune, but there are many challenges that loom ahead and require forward-thinking. CARICOM should press western governments, namely the United States, Canada, the United Kingdom, France, and the Netherlands over developing the needed infrastructure for alternative energy. Oil and natural gas may provide the tools for economic transition in Guyana and Suriname, but the clock is ticking for a global shift in energy use and, with that, the Southern Caribbean energy matrix will face another geopolitical realignment.
Georges A. Fauriol is a Fellow with Global Americans; he is also a co-chair of the Caribbean Policy Consortium (CPC), as well as a Think Tank Haiti (TTH) Steering Group member, a partnership of Université Quisqueya (Haiti) and the Inter-American Dialogue, and a senior associate at the Center for Strategic & International Studies (CSIS).
Scott B. MacDonald is the chief economist at Smith’s Research & Gradings, Research Fellow at Global Americans, and founding director of the Caribbean Policy Consortium. His latest book, The New Cold War, China and the Caribbean, is forthcoming with Palgrave Macmillan.
[1] Barbados also produces a small amount of oil and has signed a cross-border agreement with Trinidad and Tobago to explore for natural gas. There has also been exploration offshore of Grenada.
[2] Although the governments in Guyana, Suriname, and Trinidad and Tobago seek to control corruption, it remains a challenge in all three countries. According to the international corruption watchdog Transparency International, the three Southern Caribbean countries are hardly the worst offenders. From 2017-2019, Guyana ranked 87 out of 180 countries globally, while Suriname was tied with its neighbor and Trinidad and Tobago at 82 out of 180.
[3] For a broader review of Caribbean policy dynamics, see Georges A. Fauriol, “The Caribbean Potential: Reimagining the Region’s Policy Frameworks.” https://lacc.fiu.edu/research/publications/lacc-caribbean-working-paper-series/fauriol_caribbean-potential_wps1-2021.pdf
[4] Scott B. MacDonald, “Guyana, India and Oil in the Southern Caribbean,” OilNow, August 29, 2021. https://oilnow.gy/featured/guyana-india-and-oil-in-the-southern-caribbean/. Stabroek News, January 28, 2022. https://www.stabroeknews.com/2022/01/28/business/can-guyana-help-ease-indias-oil-supply-woes/.
[5] As Anthony Bryan noted in 2021, “Guyana and Suriname must endeavor to use their new wealth in ways that prepare them for a more diverse economic future, or they run the risk of repeating the mistakes of other oil states that have been damaged by the resource curse.” https://lacc.fiu.edu/research/publications/lacc-caribbean-working-paper-series/bryan_southern-caribbean-energy-matrix_wps2-2021.pdf.
The reports examine five specific areas—transnational security challenges, institutional capacity, economic growth, demographics, and technology—and…
Rewatch the first day of our sponsored conference: "Good Governance and Corruption in the Caribbean."
The strategic position of the Caribbean as the southeastern maritime border of the United States…
Filed Under: Economics, Trade & Development, The Caribbean Tagged With: ExxonMobil, Guyana, Stabroek Block, Suriname, Trinidad and Tobago
Política, economía e ideas sobre el mundo en español.
Website development by Robert Gourley.