Imagine an election where the president is a convicted murderer who killed fifteen of his opponents after ordering their torture in a UNESCO World Heritage site (here), and was also found guilty of cocaine smuggling by a Dutch court and sentenced to eleven years in prison. One of his main opponents is his former bodyguard, who launched a guerrilla campaign amongst the descendants of escaped slaves in the jungle, fighting against his former boss, by then a military dictator, and who has also been convicted of drugs smuggling, by both French and Dutch courts.
This politician has never served his sentences in Europe, as he doesn’t travel, preferring instead to toss one-hundred-dollar bills into crowds of his ecstatic supporters. He now runs a lucrative alluvial gold mining business, and a football team, whilst rapping in his spare time.
Sounds like an attractive choice, right?
One drug smuggler loses, another becomes vice president, but ex-police chief wins
Well, those were two of the candidates facing the electorate of Suriname in May, where president Desi Bouterse narrowly lost to Chandrikapersad Santokhi, a former chief of police and former justice minister. In order to form a government, however, the ex-lawman had to appoint Ronnie Brunswijk, the aforementioned former bodyguard and convicted cocaine smuggling leader of the Maroon community, as vice president.
Suriname is the only Latin American country where Dutch is the official language, and it is one of the smallest countries in Latin America, with a population of fewer than 600,000 people. It’s also the next hot spot for the oil industry and is not exactly the most stable of countries.
Like Guyana, but with a bloodier past
Last week, we reported the resolution of Guyana’s five months of political stalemate when David Granger finally stepped down from the presidency and his successor Irfaan Ali was sworn in (here), following a closely fought election marred by allegations of vote rigging by the outgoing administration (here).
Suriname’s cutthroat history makes Granger’s shenanigans across the border look like petty. Five years after independence from the Netherlands, Bouterse and his military colleagues launched the “Sergeants’ Coup” of 1980 (plural because there were sixteen of them involved), followed by the massacre of opposition supporters in the 17th century Fort Zeelandia in 1982 (they were trying to escape, claimed Bouterse, who feared they might lead a Dutch-backed counter-coup against him), then the seven year civil war between Brunswijk’s Jungle Commandos and the government, with some massacres in the jungle, and a second coup led by Bouterse, until democracy was restored in 1991 and peace brokered with the Maroon rebels in 1992 (summary here).
Ethnic divisions, conviction politics
Like Guyana, Suriname has an ethnically divided population, with communities of both Indian and African descent. In Suriname, politics have been dominated by Bouterse for four decades and are less clearly demarcated along ethnic lines than in Guyana.
However, Suriname still faced a nail-biting few weeks until it was clear that Bouterse would step down and hand over power to Santokhi. Much to the surprise of many observers, he did so, declaring “From wherever in the world our ancestors came from, we must build up the country… It won’t be an easy job; I’ve experienced that myself, but it will succeed if we work together.”
He concluded his address “If you need me, you know where to find me.”
Given his conviction for the murders by a military court and the twenty-year sentence he received, which he is appealing, that information might come in useful. He won’t be travelling, obviously. As head of state, Bouterse enjoyed diplomatic immunity, so that he could go abroad without being arrested by the Dutch for those drug trafficking crimes. Not so any more.
Santokhi was sworn in as president on July 16 in Suriname’s capital, Paramaribo.
The embarrassment of riches (not yet banked)
Both countries face the problem of what to do with their new found oil wealth. In Guyana, oil from ExxonMobil’s prolific Liza discovery started to flow in December last year. The population already has high expectations that the eight billion barrels of reserves can deliver them hitherto unknown riches.
“If properly managed and the best deal is obtained for us, oil offers every Guyanese the chance to live like Kings and Queens” declared the Kaiteur News in its commentary on Irfaan’s inauguration (here). Not especially helpful at a time when Guyanese face a difficult restructuring of the sugar industry, where the state-owned producer GuySuCo is facing a cash crunch and can barely meet its payroll.
The Economist (here) estimates that Guyana’s per capita income today is less than US$6,000. It will take a decade for ExxonMobil to ramp up to full production of over a million barrels a day from the eight billion barrels of proven reserves.
By 2030, Guyana’s total annual oil revenues could approach US$30 billion, according to Rystad Energy (here), so this prosperity is at least two electoral cycles distant. However, Guyanese have subsequently celebrated the return to work of the four drillships which are working on ExxonMobil’s development wells and exploration drilling, after the pandemic compelled the suspension of activities.
Three successes offshore, but the cupboard is bare
For Suriname, prosperity is even further away. Suriname has a meagre 16,000 barrels a day of onshore production at the moment, and a shallow water drilling campaign by the state oil company Staatsolie using Seadrill’s West Castor jackup rig in 2019 was a failure, with no discoveries.
Only a deep-water wildcat by Apache, which kicked off drilling at the end of 2019 with Noble Drilling’s drillship Noble Sam Croft, delivered success.
Just before the well completed, Total announced it would pay a bonus of US$100 million, plus a share of past costs, to buy half ownership share of the block. The well came in as a blockbuster, and two further wells have also been massive discoveries.
Total and Apache are now planning an appraisal campaign in 2021. But first oil will take at least four or five years, leaving President Santokhi in a risky position until the oil reserves are produced, as Suriname is stone-cold broke.
“We are on the brink of a financial abyss,” Santokhi has said. “There is concern. The treasury is virtually empty. This crisis surpasses any worst-case scenario we’ve considered.”
AP (here) has reported that Santokhi may need to agree to an emergency credit and a debt rescheduling programme with the International Monetary Fund. This would be a political minefield, as the population currently enjoys subsidised fuel, water and electricity, which the IMF would likely want to price at market rates.
President Santokhi has inherited an economic mess, even before the hit of the pandemic kicks in.
Have a huge pay rise, everyone
Before leaving office Mr Bouterse predictably gave public servants a 50 per cent pay rise. Strangely, in a country where the government was already running a massive budget deficit, no thought had been given on how this could be paid for.
Upon his victory, Mr Santokhi managed to convince the public-sector trade unions to wait for the pay rise because there was no cash to make it. But with excitement mounting as Apache and Total make further discoveries, patience with a “bread today, jam tomorrow” policy is going to be stretched, especially as neighbouring Guyana starts to generate big cashflows in coming years.
Vice President Brunswijk has already told his supporters, “I want to make all the poor people in Suriname rich”.
Bouterse’s solution to Suriname’s financial woes had been to turn to China. Last year, two days after that military court found him guilty of murdering those fifteen political opponents in 1982, he returned home triumphant from a diplomatic mission to Beijing.
He announced that the Chinese government had committed to US$300 million to upgrade Surname’s infrastructure, to install solar power, and to create a 5G mobile internet network in the country. Opponents feared that this Chinese support would come with strings attached, and that Chinese “smart city” technology would track citizens and monitor their communications.
The electorate’s narrow rejection of Bouterse at the polls means that Equatorial Guinean levels of government surveillance and autocracy should be off the menu in Suriname, fortunately. See here for Bloomberg’s account of the “tiny tyranny” in the oil-rich west African government in Malabo.
Beware of gifts in Paramaribo
Full credit to the electorate in Suriname for rejecting Bouterse, and good luck to Santokhi, who clearly has a tough task ahead to keep the country solvent and stable until Apache and Total can deliver oil production from their massive discoveries. With both Bouterse and Brunswijk convicted for drug smuggling, readers are advised to take care during business development visits to Suriname. It may be a future hot spot for the oil industry, but it is also a narco-trafficking centre.
The Sydney Morning Herald reported here that a devout Missouri Catholic named Denise Marie Woodrum was arrested at Sydney airport in 2017 for smuggling a kilo of cocaine into Australia “stuffed into the high heels of her shoes”. She claimed that “she was tricked by a man she met online”.
This “Hendrik Cornelius” gave her gifts in Suriname, and told her to carry them to Sydney, where, surprise, the Australian customs officers made the unfortunate discovery after swabbing her suitcase.
The case suggests that there is plenty of entrepreneurialism in Paramaribo. Let’s hope it is directed wisely.
This anonymous commentator is our insider in the world of offshore oil and gas operations. With decades in the business and a raft of contacts, this is the go-to column for the behind-the-scenes wheelings and dealings of the volatile offshore market.