Facing gridlock

A month short of four years in office, the APNU+AFC government is at serious risk of being unable to deliver on its economic and financial policies, legislative agenda and oil and gas commitments this year. The major cause of this inertia is, of course, the December 21, 2018  motion of no confidence which was declared passed at that point and is now the subject of a final challenge at the Caribbean Court of Justice (CCJ).

Nearly four months have elapsed since the Speaker declared the motion carried and that period has seen utter political deadlock and court challenge after court challenge. These conditions have been inimical to the normal functioning of the society and the international community will apprehend it in a similar way.

Parliament has met only once since December 21, when the Natural Resources Fund bill was passed on January 3rd – the same session at which the Speaker declined the government request to revisit the motion of no confidence. After the Guyana Court of Appeal gave the government a reprieve on March 22nd by declaring that the majority needed for the passage of the no confidence motion was 34, there had been a plan to schedule a parliamentary sitting on April 11. Those plans were however aborted and a date is still to be fixed. This means that for more than three months the government has been unable to present any bill addressing important policies on its legislative agenda or amendments to laws. That has to be a seminal reflection of a government in lockdown. Further, a pivotal branch of government, the legislature,  with its multifaceted sectoral and other committees has been denuded of work.

As we have said before, since it has a window of opportunity afforded to it by the Court of Appeal, the government should take to the National Assembly any pending legislation dealing with law and order, the sugar and rice industries and the oil and gas sector. The latter area demands urgent action. The government has had nearly four years to address oil and gas legislation considering that first oil could be as close as the end of this year. Unfortunately, the government has slept-walked and stumbled its way through the thicket of policies, laws and institutions that must be in place before first oil. A modern Petroleum Act should have been constructed. The Petroleum Commission bill is still gathering dust as the government tries to finalise how exactly it will relate to the Department of Energy and other parts of the oil and gas architecture. The local content policy, a model PSA and upgraded environmental legislation also remain mired in the gridlock. All the while, the oil majors like ExxonMobil must no doubt be taking advantage of the opportunities to strengthen their positions amid the political turmoil. Another US oil major, Chevron many now have access to an offshore oil block by virtue of its buyout of Anadarko. Is the government in a better position now to engage with another oil major than it was when it mindlessly concluded a Production Sharing Agreement with Exxon’s subsidiary EEPGL in 2016? The answer is a resounding no. The government may point to the recent signature of a US$20m loan from the World Bank for oil and gas governance as a sign of progress but that loan also requires a functional framework within which monies will be disbursed.

The legislative and policy gridlock is only one part of the problem. The CCJ has said that it will hear arguments on the appeal to the overturning of the motion of no confidence on May 10th. It is unclear when a decision will be handed down by the CCJ. The country therefore faces at least four more weeks of uncertainty during which time the opposition PPP/C will not participate in Parliamentary proceedings. If the court’s decision was to go in favour of the government, then it proceeds as normal with the rest of its term. If the ruling of the court goes against the government, then there would be a further period of dislocation, instability and marking time for the economy and investments. The CCJ would probably have to provide guidance on elections and related matters. This would dominate the rest of the year and make it even more difficult for the economy to pick up steam and investment decisions to be made.

Major projects like the planned new crossing over the Demerara River appear unlikely to gain traction in this period. However, there is a lack of clarity from the government on these matters which could be attributed to the uncertainty caused by the motion of no confidence. The government also has to face the fallout from the dual citizenship case on key portfolios. Though the government had said that Ministers Harmon and Greenidge had tendered their resignations, it later clarified that the resignation procedures have to be complied with. Those procedures shouldn’t take very long and will require a substantive appointment to the post of Minister of Foreign Affairs as it would be dangerous for the country not to have a fully empowered holder of that office. As it relates to the Minister of State it would be of great interest to political watchers to see how his responsibilities are carved up. Added to all of this uncertainty is the state of health of President Granger and his continuing regimen of treatment.

Given the various challenges confronting it and the likelihood of a slowdown in economic activity and investment, the government must take determined steps in critical sectors such as oil and gas and enlist the support of the opposition where necessary.

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