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.