December 18, 2023

IntelBrief: Border Dispute between Venezuela and Guyana Continues to Simmer

AP Photo/Matias Delacroix

Bottom Line Up Front

  • Guyanese President Irfaan Ali and Venezuelan President Nicolás Maduro met late last week in an attempt to diffuse escalation of a long-simmering territorial dispute over Guyana’s mineral-rich Essequibo region.
  • The discovery of large quantities of oil off the coast of Essequibo suggests Venezuela’s vote to annex the territory may be an attempt to bring in new revenue for its faltering economy and serve as a nationalist distraction ahead of its presidential elections next year.
  • The escalation is the latest border dispute that had, until recently, received little international attention despite its potential to spiral into a larger conflict, in part due to the significant economic stakes.
  • The historic continuity of the territorial dispute and Maduro’s apparent need to distract his population in the lead-up to next year’s election, coupled with global competition for resources, indicate that the issue will likely continue – even if it stays below the level of a full-scale conflict.

Amidst growing international concern and pressure from regional partners, Guyanese President Irfaan Ali and Venezuelan President Nicolás Maduro met last Thursday in an attempt to diffuse escalating tensions between their two countries over a territorial dispute. In a joint statement after the meeting, the two countries said they “will not threaten or use force against one another in any circumstances” and “will refrain, whether by words or deeds, from escalating any conflict or disagreement.” The long-simmering yet relatively dormant border dispute between Venezuela and Guyana over the Essequibo region recently escalated after Maduro held a referendum in early December to claim sovereignty over the oil and mineral-rich region. The Essequibo region comprises more than two-thirds of Guyana’s territory and 16 percent of its population. Guyana has long feared the referendum would be the pretext for a landgrab of the territory by Venezuela. Despite reports by international observers that few voters could be seen at polling centers, the Venezuelan National Electoral Council claimed 95 percent of the total 10.5 million ballots cast – slightly over half of the country’s eligible voters – approved of the nation’s territorial claim on the region. The referendum was held despite a warning two days prior from the International Court of Justice (ICJ), the United Nation’s principal judicial body, which told Venezuela to refrain from actions that would disrupt the status quo. The ICJ also emphasized that a previously established, legally binding ruling which established Guyana’s claim on the region remained in place until the Court could consider a case brought by Guyana against Venezuela on the future of the region. By moving forward with the referendum, Venezuela indicated its rejection of the ICJ’s jurisdiction on the matter, which it noted in the joint statement from last week’s meeting.

Despite the recent escalation, the dispute over the region is rooted in the complex colonial history of both countries. Beginning in 1841, the Venezuelan government and the United Kingdom disputed the demarcation of the boundary between Venezuela and British Guiana (the colony that would later be renamed Guyana after achieving independence in 1966). Venezuela claimed its borders extended as far east as the Essequibo River, delineations stemming from its time as a Spanish colony. The discovery of gold in the disputed territory further escalated tensions and competing claims. Eventually the parties submitted to international arbitration, where a Paris-based panel ruled in 1899 that the territory belonged to British Guiana. Despite ratifying the commission’s findings, Venezuela has long argued that the decision should be nullified, as its government was not present and instead represented by the United States during the arbitration.

In addition to the territory’s vast gold and copper deposits, large quantities of oil were discovered by ExxonMobil off the Essequibo coast in 2015. The discovery is expected to generate billions of dollars for Guyana and has positioned the nation to become the world’s fourth-largest offshore oil producer by 2035, ahead of the United States, Norway, and Mexico, according to a report by the UN Economic Commission for Latin America. The country’s GDP grew by 62 percent in 2022, according to the U.S. Department of State, and is projected to increase by another 37 percent in 2023 – making it one of the fastest-growing economies in the world. However, such growth has not been experienced equally among the population, as many in Guyana still live below the poverty line. The lack of expertise and training available in the country to perform the highly technical explorations and digs on the ocean floor means that few Guyanese work in the oil industry, likely leaving it reliant on international or private sector partners to develop and extract the oil discoveries. This, coupled with the lack of legal and regulatory frameworks to absorb the influx of wealth into Guyana’s coffers, has led to widespread concern among experts that it may follow the fate of petrostates like Venezuela, which can become economically vulnerable to energy price volatility and foreign capital flight. Moreover, institutions within a petrostate can be vulnerable to government corruption and weakened by leaders who use such resource wealth to repress dissent and stifle legitimate political opposition. Many experts believe Venezuela to be a failed petrostate, as the volatility of oil prices, government mismanagement, and U.S. and EU sanctions due to government repression and mass displacement of Venezuelans have sent it into an economic freefall. The decision to renew the territorial dispute over Essequibo seems to be not only an attempt to shore up a new source of revenue for Venezuela, but also to serve as a nationalist distraction from the economic crisis ahead of the upcoming presidential elections set to take place in the country next year.

The escalation over the Essequibo region is the latest border dispute that, despite previously receiving little attention, now shows the potential to spiral into a larger conflict, in part due to the high economic stakes. Several other border conflicts, including those over Northern Cyprus in the energy-rich Mediterranean and in Nagorno-Karabakh, with its proximity to key oil and natural gas infrastructure and where Azerbaijan recently engineered a mass displacement of the Armenian population, represent a trend where minor skirmishes or dormant disputes could potentially escalate and drag their broader regions into conflict. The dispute and referendum over Essequibo also reflect similar dynamics to the annexation of Crimea by Russia in 2014 and its conflict in Ukraine; the Crimean peninsula’s vast offshore oil and gas resources in the Black Sea, as well as Ukraine’s large energy, mineral, and agricultural assets have been identified as potential strategic goals for Russia’s annexation and invasion. As with the invasion of Ukraine, anticolonial narratives in support of the aggressor state circulated on social media during the initial escalation over Essequibo, with some international commentators on the far-left justifying Venezuela’s referendum by attempting to delegitimize Guyana as a “puppet state” of the U.S. and claiming the latter’s involvement in deterring a Venezuelan takeover is solely to undermine Venezuela. Leading up to last week’s diplomatic talks between Maduro and Ali, there was debate about whether the conflict would turn into a full-scale conflagration. Yet, a closed-door emergency meeting of the UN Security Council on the issue last Friday, the U.S. decision last week to hold joint flight drills in Guyana, and Brazilian President Lula da Silva’s attempts to facilitate de-escalation through talks all demonstrate the widespread international concern that the dispute could quickly deteriorate. Whether the talks last week indeed provide the sought-after, long-term diplomatic solution remains to be seen. This may become more clear in the coming months as the countries involved continue their dialogue in Brazil and the ICJ deliberates its decision on the case. Yet, the historic nature of the territorial dispute and Maduro’s apparent need to distract his population in the lead up to next year’s election, coupled with global competition for resources, indicate that the issue over the Essequibo region will likely continue – even if it does not become a full-scale conflict. Moreover, Maduro’s escalation of the dispute – and whether diplomatic de-escalation efforts are successful in the long-term – may impact the calculus of Washington’s shift in its “maximum pressure” policy on the Maduro regime, including the easing of sanctions on Venezuela’s oil sector in October.