The Drums of War Are Growing Louder in South America | naked capitalism

As tensions rise in the Essequibo territorial dispute, Brazil sends reinforcements to its northern border, Venezuela holds a referendum on whether to annex the region and Guyana mulls hosting US military bases.    

Just over two weeks ago, I posted a piece flagging the possibility that the next geopolitical flash point in this year of living dangerously could be a centuries-old border dispute in an oil-rich corner of South America. That oil-rich corner is Essequibo, a sparsely populated 160,000 square-kilometre chunk of disputed land, comprising mainly rain forest, that makes up roughly two-thirds of Guyana, a former British colony. But the land has also been claimed by Venezuela since it won its independence from Spain just over 200 years ago. With a little encouragement from the US, the dispute now threatens to escalate into a full-blown war.

A map of the region:

Troop Movements

On Wednesday (Nov 29), the Ministry of Defence of neighbouring Brazil announced it was sending military reinforcements to its northern border as a precautionary measure. The northern Brazilian state of Roraima, in the middle of the Amazon jungle, shares a border with both Venezuela and Essequibo and Brasilia is concerned that the ratcheting tensions between its two neighbours could descend into violence.

Last week, Brazil’s President Luiz Inácio Lula da Silva (aka Lula) sent his senior adviser, Celso Amorim, a former minister of defence and foreign secretary, to Caracas to meet with the President of Venezuela, Nicolás Maduro, to express the Brazilian government’s concerns about the risk of war breaking out between the two countries. That meeting does not appear to have had the desired effect. On Wednesday, Lula posted a message on X reminding that (machine translated):

When a country decides to go to war, it is declaring the bankruptcy of dialogue. And I came into politics through dialogue, and I believe that it is much more sensible and effective to waste a few hours at negotiating tables than to go around shooting at random, killing innocent women, children and men.

The Brazilian government is particularly concerned about the possible fallout from a popular consultative referendum the Maduro government is holding this Sunday on the country’s territorial claims over Essequibo. The referendum includes five questions, the fifth of which is whether citizens agree that incorporating Essequibo as part of Venezuela’s own territory and granting its “current and future population” Venezuelan citizenship is a good idea.

The move is largely seen by Maduro’s critics as an attempt to shore up domestic support at home and is also a response to Guyana’s increasingly close military ties with the US. Caracas insists that the referendum is purely consultative and non-binding, and that it has no intention of annexing the territory. But at the same time it is increasing its military activity close to the border with Essequibo, ostensibly to combat illegal mining activities.

Ominously, Venezuela’s Minister of Defence Vladimir Padrino López recently said the dispute with Guyana “is not an armed war, for now.”

“Go out and vote (in the referendum). This is not an armed war, for now, it is not an armed war,” he said, adding that the members of the Bolivarian National Armed Forces (FANB) will be “permanently on guard” for “any action that threatens” the country’s “territorial integrity.”

The government of Guyana is also raising the stakes. Up until last week it had repeatedly denied allegations from Caracas that it was planning to invite US Southern Command to set up a forward operating base in Essequibo. But then last Friday the country’s Vice President Bharrat Jagdeo said in a press conference:

“We have never been interested in military bases, but we have to protect our national interest… We’re going to be working with a number of countries on greater defence cooperation. We will have from the US Department of Defence next week two visits to Guyana, by two teams. And then several other visits in the month of December and then high level representation from the Department of Defence here.”

In other words, it appears that US Southern Command is about to set up a new forward operating base, or bases, in a territory that is still very much in dispute. That territory is not only rich in oil and gas but also boasts other mineral deposits, including Gold and Bauxite, as well as huge fish stocks and fresh water supplies. Also of note is Jagdeo’s mention of “a number of countries” with which it is seeking “greater defence countries.” Those countries include Canada, which has mining interests across Latin America, Brazil and

The US and Guyana already signed an agreement in 2020 to undertake joint military patrols in the Essequibo region, ostensibly for “drug interdiction” and to provide “greater security” to the South American country. Southcom has signed similar agreements with the governments of Ecuador and Peru in recent months (as we have covered here, here and here) and is looking to do the same with Uruguay.

A Centuries-Old Dispute

The current diplomatic tussle over Essequibo may have been ignited by the discovery in 2015 of huge deposits of oil off the coast of the disputed region but its roots date back over two centuries. Readers will not be surprised to learn that the initial antagonist in the dispute was the British Empire, which in 1814 acquired the regions of Demerara and Berbicea from the Netherlands (the cream coloured territory in the map above) after the Anglo-Dutch Treaty of 1814. In that treaty the Netherlands did not demarcate the territory’s western border with Venezuela.

That was an open invitation for the British Empire. In the chaos that resulted from the overthrow of Spanish rule in South America, the British began to exploit weaknesses in post-independence Venezuela, then part of “Gran Colombia“, to make incursions west of the Essequibo river, where gold deposits were soon discovered. The Essequibo territory had de jure belonged to the Spanish crown but it had exercised little effective control over it. Wherever British troops found a power vacuum, they left British settlers behind. It is also during this time that the British occupied the Malvinas (Falkland Islands).

In 1822, Simon Bolivar ordered his Minister in London, José Rafael Revenga, to present an official complaint to the British authorities, in the following terms:

“The settlers of Demerara and Berbice have usurped a large portion of land that according to the latest treaties between Spain and Holland belongs to us on this side of the Essequibo River. (…) said settlers must place themselves under the jurisdiction and obedience of our laws or withdraw to their former possessions.”

Needless to say, that did not happen. Over the next few decades the British progressively expanded their control over Essequibo. As the century progressed, it settled in more and more of the territories it claimed as its own, although there were periods of relative coexistence with Venezuela that put a temporary break on the British expansion. Following the British claim of 1887, which included populations under historical Spanish and Venezuelan control, the government of Venezuela decided to sever diplomatic relations.

Matters eventually came to a head at the Paris Tribunal of Arbitration, convened in 1899 to settle the dispute, at which Venezuela’s claims were, ironically, supported by Washington. Sitting on the five-member court were two Americans, representing Caracas, two Britons, representing, of course, the interests of Her Majesty’s Empire, and a Russian who was supposed to be an impartial judge. The latter, Friedrich Martens, was instrumental in tilting the ruling in the British colony’s favour.

The arbitration court agreed to grant the United Kingdom 159,000 square of territory west of the Essequibo River. Some jurists and political authorities, including the Netherlands and Brazil, warned that the ruling had been excessively generous to the British. Venezuela lodged a formal complaint, though it finally grudgingly accepted the outcome and collaborated in the demarcation of the new border. The conflict remained dormant for decades.

But all that changed in 1949, when one of the four North American lawyers who represented Venezuela in the Paris arbitration award, Severo Mallet-Prevost, had a memorandum published posthumously that documented a litany of irregularities in the process, from external pressure to the partial attitude of the Russian judge, to parallel negotiations. In other words, the trial had been rigged in the UK’s favour from day one and in Mallet-Prevost’s opinion, that was enough to nullify the ruling.

After these revelations, Venezuela resumed its territorial claim. Then, in 1966, the year the UK granted independence to Guyana, it also signed the Geneva Agreement with Venezuela, under which the parties agreed to reach a mediated solution to the Essequibo dispute, recognising Venezuela’s nullification of the 1899 decision.

But the newly independent Guyana refused to engage in direct negotiations with Venezuela, preferring instead to pursue UN-based mechanisms including through the General Assembly and the Security Council. In 1987, both countries agreed to thrash out their differences through a UN-mediated “Good Offices” process. During the Hugo Chávez era, integration with the neighbour was prioritised over territorial differences.

To begin with, Maduro continued along the same path. In September, 2013, months after Chávez’s death, he made an official visit to Georgetown and declared that the dispute was a legacy of colonialism. Then, in 2015, a consortium of oil companies led by Exxon Mobile discovered huge deposits of oil and gas in the disputed waters of Essequibo. And just like that, the conflict was reignited, but this time it is the US, not the British, that is stirring the pot.

All About the Oil

For the moment, it is Guyana’s vast untapped energy supplies that are of most interest to the US government and corporations. As a 2018 report by US Southern Command conceded, the US will have increasing difficulties securing enough energy to meet domestic demand in the decades to come. Though the report does not mention Guyana directly by name, it leaves little doubt that the US economy’s main source of energy supplies in the years to come will be its direct neighbourhood.

Then, in January this year, Southcom Commander Laura Richardson explained, with disarming frankness, US’ strategic interest in Guyanese oil in a speech to the Atlantic Council:

This region, why this region matters, with all of its rich resources and rare earth minerals: you’ve got the Lithium Triangle which is needed for technology today; 60% of the world’s lithium is in the Lithium Triangle, Argentina, Bolivia, Chile. You just had the largest oil reserves, light sweet crude discovered off of Guyana over a year ago. You have Venezuela’s resources as well with oil, copper, gold. China gets 36% of its food source from this region. We have the Amazon, lungs of the world. We have 31% of the world’s fresh water in this region too.

Below is a clip of the speech in all its glory. It is, I believe, a perfect illustration of late Major General Smedley Darlington Butler’s thesis that war is a “racket” — “possibly the oldest, easily the most profitable, surely the most vicious.” Like Butler in his day, General Richardson is nothing more than a “high-class muscle-man” — or in her case, woman — “for Big Business, for Wall Street and for the Bankers”; “a racketeer, a gangster for capitalism.” Unlike Butler (at least in his later years), Richardson seems to bask in the role.

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If anything, war is even more of a racket today than it was back in Butler’s time (early 20th century), mainly because the business of war is so much larger. In Guyana, the US stands to benefit not only from gaining access to valuable mineral resources at dirt cheap prices — the production sharing agreement the Guyanese government signed with the Exxon Mobil consortium was so egregious that a former presidential adviser cautioned that the country was being “recolonised” — and without having to pay any of the externalities; it will also get to sell Guyana shiploads of US-made weapons and other military equipment.

That’s right: much of the money the Guyanese government earns from its paltry oil and gas royalties [just 2% in the case of the 016 Stabroek offshore license) will be funnelled into the US military industrial complex, just as happens with all US wars. For example, Guyana’s coast guard just took delivery of a patrol boat built by Metal Shark, a US military contractor that has sold well over a dozen maritime combat vessels to Ukraine since the war began there.

As Julian Assange once said about the Afghan war, the goal is “to wash money out of the tax bases of the United States, out of the tax bases of Europe,” through the target country, “and back into the hands of a transnational security elite.”

Exxon’s Revenge

The US began taking an interest in Guyana, which boasts one of the lowest population densities on the planet, in 2015 — the same year that a consortium of firms led by Exxon Mobil discovered huge deposits of oil in waters off the coast of Essequibo. For decades Washington had more or less stood on the sidelines of the territorial dispute over Essequibo, calling for a “timely resolution” through bilateral negotiations. But that all changed in 2018, when it began calling for the hugely controversial 1899 arbitration decision to be upheld.

In the same year, Guyana filed an application before the International Court of Justice (ICJ) asking the Court to reaffirm the 1899 arbitration award that established the boundary between Guyana and Venezuela. In 2020, the ICJ ruled against Venezuela, whose government refuses to acknowledge ICJ jurisdiction on the matter.

As the Washington Post reported in 2017, the discovery of oil in Essequibo was the perfect revenge for Exxon’s then-CEO Rex Tillerson, whom Donald Trump would later go on to appoint as his secretary of state: