In the race for control over the world’s energy market, China has set its sights on an unlikely target. Vast discoveries of offshore oil deposits in Guyana have turned the country of barely 800,000 into a global treasure. Given China’s current dominance in the region, the United States would be wise to combat the spread of authoritarian corruption by collaborating with the Guyanese government and investing in the region’s economic development.
Since 2015, a consortium of companies, including ExxonMobil and Hess, began to finance large energy projects that seek to tap into a projected 10 billion barrels of recoverable oil in Guyana. The former British colony’s economy is projected to grow by 23 percent in 2023 thanks to the oil boom and companies like ExxonMobil, which are developing most of the oil platforms.
To get in on this explosive growth, both foreign companies and governments—including China—have stepped up to provide loans for major infrastructure projects. Washington cannot allow China to secure another oil-rich ally in the region by buying up strategic assets in the country. Existing U.S. engagement in Guyana is minimal outside of public health programs. To combat China’s subversive influence, we must work together with established energy companies in the region to build ties with the Guyanese government.
Chinese investment in Guyana stands to yield major dividends for Beijing. China Railway Group, a state-controlled company, is currently building and funding the Amaila Falls hydroelectric plant, expected to produce 1,047 gigawatt hours (GWh) of electricity. China has also taken the lead in funding bridges, roads, and projects in Guyana’s interior to bolster its energy infrastructure. This is the largest roadblock to its economic development, but with Chinese help, it won’t be for long. Multiple Chinese state-owned enterprises have received contracts in the coastal capital of Georgetown to build a new harbor and expand the Cheddi Jagan International Airport. The Guyanese government is even working with Huawei on a smart cities surveillance plan.
It’s no wonder that Guyana’s politicians support Chinese expansionist projects in their country. Guyanese President Mohamed Irfaan Ali expressed support for China’s Belt and Road Initiative (BRI) and Global Development Initiative (GDI), as well as for greater collaboration in the mining, energy, and manufacturing sectors.
However, working with China involves hidden costs in the form of mounting foreign debt for Guyana. Recognizing this, the country’s former Auditor General––Anand Goolsarran––cautioned against accumulating too much debt with China due to the high cost of the harbor and airport projects.
These fears are well-founded: next door in Suriname, a Chinese state bank seized funds when the country could not keep up with debt payments. Opaque clauses and additional interest rates have caused some countries, most notably Sri Lanka, to be unable to pay back Chinese loans, having to exchange crucial strategic or economic assets for debt forgiveness.
While China, Venezuela, and Russia are already deeply involved in Guyana, U.S. engagement is almost nonexistent outside private energy companies. Even worse, the projects that American companies have invested in are mired in geo-political conflict. ExxonMobil just announced its sixth Guyanese project, worth $12.9 billion and projected to produce 250,000 barrels of oil per day. Yet the country’s hundred-year-old dispute with Venezuela threatens to undermine the project.
Though Venezuela has claimed more than 62,000 square miles of Guyanese territory since the nineteenth century, the Maduro regime has recently reignited these claims, which affect thirty of Exxon Mobil’s oil wells. Due to a collapse in oil production from Maduro’s socialist policies, Venezuela needs an economic lifeline to uplift its economy in the face of U.S. sanctions for human rights abuses. Maduro is visiting China this month to try and win economic support; Russia has already provided Caracas with security and economic aid, along with joint military exercises.
Greater collaboration between China, Russia, and Venezuela poses a direct threat to the United States. China has made its intentions clear by sponsoring an intelligence base in Cuba, one of Venezuela’s closest historical allies. Russia has repeatedly helped shore up Venezuela’s regime as well as Daniel Ortega’s Nicaragua. If Venezuela were to capitalize on Guyana’s oil boom, then the Russian-backed regime of Maduro could encourage greater drug trafficking in the region, to the detriment of the United States.
The Venezuelan regime already allows cocaine growers and traffickers to operate within the country with impunity. Allowing Venezuela to access Guyanese oil profits via a Chinese state-owned bank or through collaborations with Chinese companies regarding economic development in Guyana would create a strong, anti-American front in South America.
To counter this authoritarian dominance, the U.S. government must build stronger ties with Guyana by ensuring that U.S. energy companies invest the profits gained from this oil boom into the nation’s economy, public education, and standard of living. In this way, the United States can keep Guyanese profits from getting tied up in Chinese debt schemes and ensure that they are instead used to improve the standard of living in Guyana. Championing anti-corruption and closer collaboration with Guyana’s government will benefit both Guyana’s future and America’s diplomatic and security interests.
Roy Mathews is a Writer for Young Voices. He is a graduate of Bates College and a 2023 Publius Fellow at The Claremont Institute. He has been published in the Wall Street Journal, National Review, and Law & Liberty.