Plunder and Pillage: The Menace to our Natural Resources

DAYCLEAN, Vol 1, No. 2
29 March 2007

Plunder and Pillage: The Menace to our Natural Resources

By all accounts Guyana is a stereotypical model of classical colonial natural
resource exploitation of under-developed regions. This fits our experience in
forestry, bauxite, gold, diamonds, and even the prospecting for oil that is
presently taking place.

Dayclean plans to run a series on these colonial forms of natural resource
exploitation beginning with forestry. Here we attempt to portray some of the
major elements of the colonial model.

First, natural resources are routinely extracted at a primary level
with little
or no value added through further processing. Second, such primary extraction
constitutes the main pillars of the economy and the main engines of whatever
growth is supposed to take place. In the main this growth has been
distressingly miniscule, and because of the operations of the world market for
pricing primary products, the pillars have been highly unstable.

Third, the leading firms in this primary extractive sector are usually foreign
owned and/or controlled. Sometimes there is a residual local ownership, mainly
through the state. But this can by no means be considered the basis of a truly
joint-venture operation.

Modalities
Fourth, there are several modalities, which are central to the operations of
these firms. One is that there is always some element of subsidisation through
the state: low or no taxes are paid, importation of goods and equipment
is duty
free, and foreign management and skilled workers operate in the technical and
managerial sphere and low order labour is provided by the local market. This
labour is exploited extensively through relatively low pay and long working
hours, in comparison with world standards. In addition, when these firms
install infrastructure such as roads, hospitals, schools they are only
to serve
their own employees. They remain as islands of ?privilege? in the poor
communities in which they are located.

Fifth, these arrangements generate significant profits, even when no
profits are
formally declared locally. This is often because masking commercial
transfers by
way of ?transfer pricing? and income tax manipulation is what the
multinational firms in these sectors do.

Regulation and Oversight
Sixth, a highly distinguishing feature of these arrangements is weak
regulation
and oversight. This reflects on the one hand a limited capacity to
provide this
on the part of the host Government and on the other hand a lack of political
will to enforce regulation. Firms therefore engage in what is known as
?regulatory capture?. That is the regulatory offices serve the biddings of
the firms and not the other way around. Not surprisingly these arrangements
ignore the external costs and diseconomies associated with the industry. The
most flagrant of these is environmental abuse and degradation.

Because of this set up very little real transfer of technology takes place and
on a world scale local operatives perform low technology functions. There are
also instances where the indigenous rights of the people in those communities
where the natural resources are being exploited are violated. The local
judicial process rarely offers them any protection because of backward and
out-of-date legislation. Often the best recourse is to try to take the case to
an international tribunal. This has become an important strategy for those
engage in the struggle to bring an end to this plunder and pillage of natural
resources.