Suriname: The Next Oil Superpower or Failed State?

(National Interest, 21.Dec.2020) — Although 2020 will go down as one of the worst years for most countries, it was a pivotal time for Suriname.

The small, Dutch-speaking South American country had a critical election; its economy was upended by poor economic management by the outgoing government; the coronavirus pandemic created even more economic damage; and there were discoveries of commercially largescale offshore oil reserves. Under these changes, the old Suriname that existed on the periphery of the global economy evaporated. The world has arrived in Suriname in the form of multinational oil companies, investors and the United States, China, and the Netherlands. These new arrivals are not going away any time soon. With a population of a little under 600,000 people, Suriname has entered the 2020s as a hotspot for business and global politics. For the new government, the pressure is on.

The most significant development in 2020 was the May 25, 2020 elections, which probably concluded the Bouterse-era in Surinamese politics. In one form or another Desi Bouterse has cast a long shadow over Surinamese politics since the military coup in 1980. The hard-fought 2020 election saw his National Democratic Party lose its majority and a new four-party coalition led by the Progressive Reform Party (VHP) and Chan Santokhi gain a thin majority. Although there was a delay in declaring the election, the Bouterse government eventually conceded its loss in June and the country moved on to a new era.

Suriname’s political and economic trajectories will be determined on the momentum of the Santokhi government tackling a crowded agenda. That includes dealing with the country’s creditors (payments on bonds have been missed) and reaching a deal with the International Monetary Fund to jumpstart the economy. Moreover, the new leadership will have to convince foreign investors that Suriname as is a safe place to do business in terms of political risk and also dealing with governance issues. Perhaps the last is the most significant in that the most recent Bouterse-era (2010-2020) was marked by corruption, money laundering and circumventing international sanctions for the Maduro regime in Venezuela.

Bouterse was at the apex of the corruption pyramid, externally bolstered by an array of anti-Western enablers (China, Venezuela and Cuba). However, members of his government (including former Finance Minister Gillmore Hoefdraad who is on the run, and a former head of the central bank, Robert van Trikt) have also been charged with corruption. 

One of the main concerns for foreign investors is whether Suriname’s ethnic relations have the same potential for violence as often perceived in neighboring Guyana. Although there are ethnic cleavages in Suriname, they are not at the same level as in Guyana. Political parties in Guyana have tended to have a strong ethnic identity, a situation not helped by the long dominance of Afro-Guyanese Forbes Burnham who was a strongman from 1964 to his death in 1985. The Burnham years saw the economy run into the ground, nationalization of much of the economy and largescale migration to the United States, Canada and the United Kingdom (many of the people leaving being Indo-Guyanese). There was a brief period of more open politics under Desmond Hoyte, another Afro-Guyanese, which led in 1992 to the election of Cheddi Jagan, the leader of largely Indo-Guyanese Popular People’s Party (PPP). He ushered in over fifteen years of rule by the Indo-Guyanese-based PPP. It was only in 2015 that a People’s National Congress coalition government (strongly identified with the Afro-Guyanese community) was able to break the dominance of the PPP (which is still perceived as a largely Indo-Guyanese party).

To a backdrop of a massive offshore oil discovery by ExxonMobil in 2015, the Guyanese 2020 elections were hard fought and had a strong tone of ethnic friction. The protracted process between the loss of a no confidence vote in December 2018 and the holding of the elections in March 2020 and then a lengthy and contested delay as to the election’s outcome stoked ethnic tensions. It was only in August that the PPP-led coalition was allowed to take office.   

In Suriname, the ethnic frictions in society have not been at the same level. In Guyana there are two major ethnic-racial groups (Indo-Guyanese 39.8% and African descent 29.3%). Neither group entirely trusts the other and the injection of oil wealth has raised very profound questions in Guyana as to how the money will be spent or who will benefit.

Unlike Guyana, Suriname is a country of smaller minorities with Hindustani making up 27.4% of the total population, Maroons (descendants of African slaves who escaped into the interior) 21.7%, Creoles (mixed black and white) 15.7%, mixed 13.4% and other 8.2%. While Suriname’s ethnic mix makes forming political coalitions a challenge, there seems to be a consensus among a majority of the population for a more open and democratic government as opposed to out-and-out strongman rule (which is what they had during the 1980-1987 period which included the December 1982 massacre of fifteen opposition figures on the orders of Bouterse).   

The Progressive Reform Party (VHP)-ABOP-NPS-Pertjajah Luhur coalition is likely to remain in power through its five-year tenure, though there are going to be major challenges to President Santokhi’s government. The three major challenges are the economy (which should start to recover in 2021); what to do with Bouterse (who is fighting his twenty-year sentence), and general governance. All three issues are likely to shape how the government approaches what could be an oil bonanza. Despite the “green wave” of alternative energy policies in advanced economies, oil and natural gas are likely to play a critical role in the global economy through at least the next twenty years, which could give Suriname an opportunity to tap oil as a bridge to a greener future. 

As for Bouterse, he is seventy-five years old and not in good health. This state of affairs could also mean that his political party, the National Democratic Party could fragment without a strong hand to hold it together. While health and legal issues make it questionable about a Bouterse political comeback, he could still be a source of troublemaking. President Santokhi may be willing to let the court system drag out the case for longer and hope that the old strongman fades. That is, of course, would be a calculated risk. 

With an eye to legitimacy and popularity tackling corruption is a front and center issue. The new government has done some of what governments before it have done; appoint family members and friends to key government posts. This is very much noticed by the public through both an active and vocal media as well as a court system that is beginning to look more forcefully into public corruption. This is a big challenge. As Ine Apapoe, a public administrator and a head of the Public Administration department at the Anton de Kom University of Suriname stated in December 2020, “…a complete mind shift is necessary for Suriname. Everyone in the country has to realize that good governance is a collective responsibility. Ultimately, it will depend on the political will of the government to make and enforce the actions that will build and maintain good governance, but it is the Surinamese society who must hold the politicians accountable, demand integrity, combat complacency towards corrupt practices, and insist that unethical behavior will not be tolerated or accepted.”

Another key factor for change in Suriname is that the new government has considerable goodwill from the United States and the Netherlands. Help is available for better governance through bilateral links as well as through the Inter-American Development Bank. Although China has become engaged in Suriname’s economic life and is a creditor, the United States has little intention of seeing Beijing gain more influence. The change in government is significant; former president Bouterse was in China in November 2019 when the Surinamese court declared its twenty-year prison sentence on the head of state. The new government was the first in Suriname’s history to receive a visit by a U.S. Secretary of State, Mike Pompeo, in September 2020.

Oil, digital communications and a younger, better educated and more traveled younger population are bringing the world to Suriname. Change has arrived. There is some hope to be found in the country being able to manage the road ahead by having part of the institutional structure in place: a state-owned oil company that is vertically and horizontally integrated and experienced, a judiciary that appears to be waking up and a lively and critical press. For Suriname to become a more open and transparent society it needs to make major strides, such as enforcing laws currently on the books, the creation of an Anti-Corruption Commission and establishing a Transparency International office (a major NGO that helps countries deal with corruption).

Suriname’s challenges are substantial, but the country’s relative isolation has been stripped away and the Santokhi government is under more scrutiny than the governments before it. For Suriname the stakes are high; getting it right is key to plugging into the global economy and being able to use oil as a bridge to a better future. Getting it wrong could take the country down the road to the oil curse of deeper corruption along the lines of what has happened in Angola, Chad and Venezuela. 2020 set a new game in motion; 2021 is set to see whether the government has the political will to enact the reforms needed and if it can ride its way through an increasingly challenging geopolitical landscape.

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Scott B. MacDonald is the Chief Economist for Smith’s Research and Gradings and a member of the Caribbean Policy Consortium.