Intertwined concerns around geopolitics, economic interests and historical claims have escalated the stand-off. However, the silver lining is that the two countries have decided to keep communication channels open for negotiations
At the heart of the dispute between Guyana and Venezuela lies Essequibo, an oil and mineral-rich (gold, copper, diamond, aluminium and iron ore) region.
Historically, Essequibo was part of Venezuela during the Spanish colonial period. Disputes stretch back to 1841. That is when the Venezuelan government alleged that in its acquisition of British Guiana (now Guyana) from the Netherlands, the British had encroached on Venezuelan territory. This changed when this region was awarded to Guyana in 1899 by an International Arbitral Award. Guyana, of which Essequibo makes up more than two-thirds of the territory and hosts 125,000 of its 800,000 citizens, has administered the territory ever since borders were determined.
Venezuela has, for decades, laid claim to Essequibo. It has claimed that the Essequibo river to the region’s east forms a natural border and has historically been recognised as such. The dispute that goes back nearly 80 years, escalated after the discovery of an enormous reserve of oil by Exxon Mobil in 2015. The financial turn has been such that oil contributes to nearly 62 per cent growth in gross domestic product compared to a meagre 5 per cent in 2019 in Guyana. Guyana received bids for new shallow water and deep water blocks from local and foreign companies in its first international bidding round for the exploration licence. With these resources, the country is set to surpass oil production in Venezuela, and by 2025, based on extrapolations, it may well tread on the road to becoming the world’s largest per-capita crude producer.
To back its claim over Essequibo, Venezuela held a non-binding referendum on the region’s fate on December 3, 2023. The voters were asked whether they supported establishing it as a province, granting citizenship to current and future area residents and rejecting the jurisdiction of the International Court of Justice (ICJ) in settling the disagreement between the South American countries. According to Venezuelans, the importance of this referendum is that they have to defend the territorial integrity and sovereignty of a region that historically is part of their country. The outcome of the voting has been described as a total success since 95 per cent of Venezuelans voted in favour of creating a new province in the Essequibo region. Interestingly, even though Maria Corina Machado, the Presidential candidate of the Venezuelan opposition in the 2024 elections, talks about the futility of the referendum since this matter was sub-judice at the ICJ, she resonates with Maduro’s assertion that Essequibo is an integral part of Venezuela.
The December 3 vote was held despite the ICJ warning Venezuela against ‘taking any action’ on a matter that was being tried, which could alter the region’s status quo. Undoubtedly, the Venezuelan referendum has been held to create unity in a divided country on issues of borders, which evokes nationalistic sentiments and becomes a unifying factor. The covert motive is the deflection of discontent of the citizenry on domestic issues. The so-called consultative referendum was to lessen President Nicolás Maduro’s extreme unpopularity.
The government has ordered state companies to exploit gas and oil in the contested region, and for this, they would be granted operating licences for exploration and exploitation. Maduro has also given an ultimatum to Guyanese companies to withdraw their operations within three months. President Maduro ordered the country’s oil companies to issue extraction licenses in oil-rich Essequibo, a region in neighbouring Guyana. President Irfaan Ali of Guyana hoisted his country’s flag in the Essequibo region as a symbolic gesture to assert its sovereignty. Seemingly, the Guyanese Defence Forces are on high alert in response to the movement of Venezuelan armed personnel along the border. The government is reaching out to its regional partners, with some of whom Guyana has defence agreements. Guyana has reached out to its allies and leaders abroad, including the US, India and Cuba, hoping that ‘they can encourage Venezuela to do what is right’. It would even approach the UN Security Council as an injured party for help if Venezuela makes any moves following the referendum. President Ali has asserted that he would not hesitate to move an urgent application to the ICJ. The President has assured the investors who have been asked to pull out that they had nothing to fear as he has already spoken to UN Secretary General António Guterres.
What are the ramifications?
Concerns for regional stability in the wake of implementation of the referendum’s results would be imminent. India, which was the fifth-largest importer of oil from Venezuela, will tilt towards Guyana due to the diasporic connection (descendants of indentured labourers who were brought by British colonial authorities to work in the sugarcane fields of the country). India’s standpoint would be something that Guyana would naturally be looking forward to.
US Secretary of State Antony Blinken has reaffirmed Washington’s position that Guyana has full sovereignty over its 159,500 sq km (61,600 sq mile) Essequibo region. Given the fact that Guyana has only 5,000 troops, the issue may culminate in another proxy war.
Brazil has started reinforcing its northern border due to the rising tensions between Venezuela and Guyana. Brazilian troops have moved to Boa Vista, the capital of Roraima State, which borders both Venezuela and Guyana. The Brazilian government will support Venezuela and Guyana in resolving the border dispute. Brazil’s top foreign policy advisor Celso Amorim has urged Venezuela to avoid the use of force or threat over the border region. He alludes, “There are new facts that are still more worrisome. We will not fail to transmit our concerns, especially in relation to the policy of no use of force.”
The role of China will be interesting as a stabiliser. Beijing’s remark that both countries were good friends of China has come in the wake of the referendum. It asserts that it has always respected sovereignty and territorial integrity.
To conclude, intertwined concerns around geopolitics, economic interests and historical claims have escalated the stand-off. However, the silver lining is that the two countries have decided to keep communication channels open for negotiations. Maduro reassured that he would not invade the territory since he is mindful of the fact that any move would invite international criticism. Even the allies of Venezuela, such as Cuba or Brazil, will not be on Maduro’s side and are endorsing the use of dialogue and diplomacy. ICJ has opined that Venezuela must refrain from taking any action in this dispute till the final decision is given.
Analysts say that the referendum vote was an attempt by Maduro to gauge his government’s support ahead of the 2024 presidential election. For Venezuela, which has faced hyperinflation, international sanctions, and economic crises in recent years, a revival of the country’s oil industry in the backdrop of US sanctions could help stabilise the economy.
Aprajita Kashyap is with the Centre for Canadian, US & Latin American Studies, Jawaharlal Nehru University, New Delhi
Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth
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