President Ali displayed good reasoning in his speech last Sunday on World Environment Day. He correctly makes the point that the developed countries are unfair in using the environment to want us to not exploit our resources, while they renege on what they owe the present population of the Earth for the environment they have already exploited in past generations to enrich themselves. Can he do anything about it to bring them to heel for Guyana at least? The answer is yes! The oil companies are already effectively repatriating about 85% of the value of the oil by –
1. Buying equipment manufactured in the developed countries, thus developing those economies more;
2. Providing expensive technical expertise, remunerated at their rates, only paying taxes to us if they choose to be more than 180 days in our inefficient jurisdiction; and
3. Their 12.5% of the so far unaudited profits.
Some developed countries have now slapped a windfall tax on their oil companies. The USA is also budgeting to ensure that their multinational corporations pay an effective tax rate of at least 15%. They did not make deals with their oil companies to pay no tax or even, like we seem to be doing, paying their taxes for them. Those developed countries considered the needs of their people while allowing their companies to thrive.
So what can President Ali do? He can insist we get at least 50% returns from the oil. Complaining to his own people that the developed countries are not doing their share sounds nice in a speech and makes him look clever. But his words are not going to change the attitude of the developed countries, who are not under his jurisdiction. The oil companies are in his jurisdiction. Does he have the guts to treat them like the developed countries treat the oil companies in their jurisdiction? Or is he in his turn being bullied?
Sincerely,
Alfred Bhulai
