Tuesday, July 16, 2024
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Guyana using its foreign policy for economic development

By Wazim Mowla

While some states aim to use foreign policy to increase their standing in the world, for advocacy, or as a tool to compete with others, Guyana’s has centered on promoting its economic development at home. Guyana, whose oil resources has brought it new political and economic capital, is using its ministry of foreign affairs to strengthen existing relations with old allies and build new partnerships with other oil-producing nations as a way to draw foreign direct investment to both its oil and non-oil sectors. The latest example was Guyana’s announcement that it will open embassies in Qatar and the United Arab Emirates (UAE), joining the extant mission in Kuwait.

Guyana, the new oil and gas wealthy Caribbean state, is primed to use its new economic clout to rapidly further its economic development. For perspective, an energy economist at the Inter-American Development Bank recently stated that if Guyana produces around 750,000 barrels of oil per day by 2025, the country can surpass its neighbour Venezuela – which hosts one of the world’s largest oil reserves. Even at its current capacity, Guyana is producing enough oil that it was the only Caribbean nation to not suffer an economic contraction as a result of the devasting COVID-19 pandemic.

President Irfaan Ali’s administration is capitalizing upon this economic wealth by shifting Guyana’s foreign policy objectives to a more business-friendly approach. While Guyana continues to focus on external matters, such as its longstanding border controversy with Venezuela and its relations with the US, China, and India, there is added attention toward new corners of the world, namely with states that offer Guyana new avenues to increase investments for the country. For instance, in February 2021, Guyana announced that it will establish two new embassies in the Middle East. Guyana’s mission in Kuwait and consulates in Jordan, Israel, and Lebanon will be joined by one in the UAE, which is home to Dubai, and the other in Qatar.

The announcement of these embassies occurred after high-level visits and discussions with officials from the Middle East about Guyana’s oil sector, which also resulted in interest in agriculture and aid to help Guyana fight the pandemic. Shortly after president Ali was inaugurated, a team from the UAE arrived in Guyana, where discussions were held about oil and gas, as well as on the agricultural sector, including Guyana’s sugar industry, which has been a focus of the Ali administration. Further, president Ali’s conversations with the Emir of Qatar mirrored that of the UAE, and it resulted in discussions about Qatari investment opportunities in Guyana’s Halaal industry. The latter discussion also included Qatar sending a field hospital to Guyana to aid in the country’s fight against the pandemic.

The outcome of the visits and conversations shows the utility of having them with potential investors in oil and gas because often, the results will include investments in the non-oil sector. This was on display at the launch of the Canada-Guyana Chamber of Commerce, where the deputy minister of international trade at Global Affairs Canada noted that “the petroleum sector will only serve to increase partnerships” with areas of agriculture and the financial sector. If this is possible with old allies, the same can be seen for potential new ones. As a result, Guyana can view opening new embassies as a method of entering new markets for its non-oil sectors in its efforts to diversify its economy by becoming less reliant on natural resources.

To do this, Guyana will need to continue expanding its diplomatic relations with other countries. If Guyana relies on state-to-state discussions as a way to draw interest to the country, little investment is likely to materialize, and if substantial investments occur, it might be an ad-hoc event. If an embassy is opened, it would move beyond one-off discussions between government officials and instead establish a direct, open line between each country’s representatives. And with the establishment of an embassy, there would consistently be an open line for potential investors. Further, having an embassy means that Guyanese officials learn and understand the culture of the country that hosts the embassy, so they could market Guyana’s potential within the context of the host country.

Further, opening embassies can also open new markets for Guyana’s sugar industry, rice, the private sector, and for the country’s small businesses that might struggle to compete in traditional markets in the Western Hemisphere. It is for this reason that president Ali recently commented that “the business community must not only think local but also regional and international,” which means that with the establishment of the Middle East embassies, the government has opened the pathway for new markets in the international arena.

In addition, this Guyanese foreign policy format can lead to broader opportunities, including strengthening the country’s human capital through educational and people-to-people exchanges. For example, Kuwait, the UAE, and Qatar have proven themselves adept in economic development as it pertains to oil and also tourism. These embassies can help facilitate educational exchanges, where Guyanese people can travel to the Middle East and learn the technical skills that can help fill gaps in Guyana’s oil sector. Further, it can incentivize people in the Middle East to travel to Guyana, thus adding a new source of tourism for the country.

Therefore, if Guyana continues to use its potential oil and gas wealth to leverage new diplomatic relationships in order to promote its development, Guyanese citizens will reap the benefits. However, Guyana must not stop at the new UAE and Qatari embassies and instead expand quickly over the next decade. More embassies mean greater chances of investment opportunities for Guyana’s non-oil sector and by extension, its people.

Guyana should continue to open embassies in the Middle East, such as with Saudi Arabia, but at the same time look toward European countries, as it looks to increase markets for rice and sugar, as well as Africa and East Asia. If Guyana manages to do this during the next few years, while the world watches its unprecedented economic growth, the country will quickly amplify its development.



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