OPINION: Unenforceable makes the ExxonMobil contract look rich

Last Updated on Monday, 2 April 2018, 12:43 by Denis Chabrol

by GHK Lall

“Venezuela says move to ICJ on border controversy unenforceable” (Stabroek News April 1).  I believe that Stabroek News is too sober and responsible to engage in April Fool jokes, but there it is in black and white, and as final as a fatal heart attack.  That one word “unenforceable” says it all. I proceed.

First, I did not promise myself, but I thought that I had written my last word on oil.  I plan on leaving that door slightly open for the time being.

Second, so much has been written about resource curse and Dutch disease that citizens are already fearfully cripplingly sick.  Those who are not, imagine that they are, given the tidal waves of expert opinions and positions and oil papers.  I agree that the terms of the oil contract are indeed unfavorable to Guyana and lopsided (to use the word of choice).  But I have always taken the position that the comparisons to the contracts of other countries ignore and too quickly dismiss the unique context and realities of Guyana; and that this country had to pay a commensurately high price to challenge, manage, and overcome that overwhelming context.  It was a show stopper and a drop dead one, as Venezuela just made clear.

Third, to those pretending at blindness and the patriotic citizen-ostriches (learned commentators in the main), the Venezuelans just made public their first card by putting it on the table in plain sight, and through one plainer word: it is the trump of “unenforceable.”  That is part of the alpha and omega of the Guyana oil context and contract. ExxonMobil had this country over a barrel; it had to pay through the nose, with blood in its eyes, and with an arm and leg thrown in for good measure.  Through that single word (unenforceable), Venezuela made its thinking and position clear and final; it also consigned to the irrelevancy of uselessness all the domestic calculations, extrapolations, and mental gyrations.  I repeat: it has made moot all that has infested local assertions, local dreams, and what has metamorphosed into local intellectual hallucinations.  I daresay that which has been converted into an oligarchic domestic industry (oil panegyrics) has, from my perspective, been forced to retreat into bankruptcy.

Fourth, by announcing where it stands openly and unambiguously, the Venezuelans are willing to gamble that they can absorb whatever territory follows their outright position of premediated and blatant rejection of any ICJ determination/decision through this posture of it being “unenforceable” and all that that embodies.  Whether such rejection leads to condemnation and outcast status in the comity of nations, neighbors are ready to live with the heavy body blows, given the enormity of the prize involved.  It never had any intention, not even remotely, of ever relinquishing its claim.  Never had; never will.

Fifth, having said this, the Venezuelans have allowed a glimpse of their calculations in this (to continue with the gambling scenario) game of high stakes maneuvering.  It does not have an unbeatable hand, perhaps not even a competitive one, and its leaders know so.  Thus it is prepared to hedge its bets through the insurance of negotiation for resolution.  It would come out with something tangible, maybe acceptable and marketable to political foes and citizens alike.

Sixth, this is where the rubber meets the road; it is embedded in that offer to resolve one on one and eyeball to eyeball, with no adjudicators hovering or intervening.  Wherever this may lead, if anywhere, and however finalized (ICJ, negotiations) I submit that the price will be steeper when compared to the ExxonMobil contract terms as lopsided as they are.  This is the crux of the matter.  I submit further that whatever the square mileage that could be involved, the potential in lost revenue (and not only from oil) would significantly outweigh what has been executed with ExxonMobil.

Seventh, I go on record, even at this early hour, as being of the belief that any ICJ decision will not be totally in Guyana’s favor or in line with its expectations.

Last, the existing contract leaves a lot to be desired.  And while the government has made some material mistakes, the ExxonMobil contract should not be numbered among them.  What the PPP called “strategic considerations” in this very newspaper recently re its 1999 contract dealings still hold water today, almost nineteen years later.  Nothing has changed on the Guyana side.  I think this government (and its predecessor) did as best as it could, given the known weakness of the hand it held.