THE GUYANA-ALCAN CONFLICT AND THE NATIONALIZATION OF DEMBA*
- THE PRELUDE
The analyst ism some difficulty in trying to locate some event of series of events which led the Government to seek participation in Demba in 1970. Probably the most convenient place to start is with the resolution adopted by the People’s National Congress, the ruling party, at its annual convention held in April 1970. Tb.is resolution called for Government, by itself or in association with co-operatives, to hold a minimum of 51 percent of the equity in ventures exploiting the country’s forest and mining resources.
Yet this resolution, which was subsequently used frequently by the Government as a mandate, can itself only be properly understood against the background of the history of Demba in Guyana and the internal politics of the country. As we have seen the very terms on which Demba was established in Guyana cast it in the mould of a foreign expropriator, and the company’s subsequent performance gave every confirmation to the view. It was not only that Guyana’s bauxite as used to industrialise and develop Canada and the United States rather than Guyana; it was also that the mining community based on Demba some sixty miles up the Demerara River became a running colonial sore on the body of Guyanese society. In effect the Mackenzie-Wismar community combined the features of white supremacy, residential and recreational apartheid, and the most wretched slum conditions of workers and their dependents existing cheek by jowl with gracious white living. Mackenzie became a legendary name in Guyana, connoting relatively high wages at the same time as a high rate of alcoholism, unstable man-woman relationships and a high incidence of venereal disease, a high labour turnover and constant tale of labour unrest characterised by continual wildcat strikes(8). Thus although Demba employed a relatively small proportion of the Guyanese work force, there were few Guyanese who bad never worked or lived there or never had relatives or friends who had worked or lived there, and who did not share the love-hate relationship with Demba due to the combination of high wages with repugnant working and living conditions.
Next it must be recalled that this community existed in the context of a Guyana which since the early 1950s has been marked by a fever of political activity characterised by nationalist and socialist ideology and racial consciousness. Indeed in recognising the primacy of race in Guyanese politics since the late 1950s it is easy to overlook the fact that all sections of the Guyanese population had been radicalised by the original People’s Progressive Party and the British intervention of 1953 and both sections of the national movement retained a nationalist and socialist ideology after the split. Moreover, although the internecine strife of the 1960s did deflect the population from a course of confrontation with the Imperial power, it did involve a high degree of mobilisation of Africans and Indians in defence of perceived group interests, a mobilisation with obvious revolutionary potential for the future.
The third factor to take into account is the general disaffection amongst large sections of the Caribbean population since the arrival of political independence ha foiled to bring with it an end to white economic domination and black economic dispossession. This disaffection is most noticeable in Jamaica where it is manifested by daily bloody confrontations between the police and the people, and in Trinidad where Black Power demonstrations nearly brought down the Government in 1970. Nonetheless it is no less present in Guyana and there, as in the remainder of the region, it presented the regime with an agonising dilemma: how does a political regime which has acquired office as a result of popular mobilisation on the one hand and accommodation to external political and economic interests on the other hand, deal with a situation where the two become increasingly irreconcilable? In Guyana the mean chosen was the establishment of the Co-operative Republic in February I 970 with the objective of making the small ma a real man”, and the chosen instrument the co-operative. And whereas at the very outset the co-operative sector was not geared to challenging the foreign white sector it was obvious that the process of economic decolonisation could not go far without just such a confrontation. In the months of April and May the Prime Minister began to speak of Government’s intention to seek “meaningful participation” in the bauxite industry and by the end of May it seemed that the Government was in fact aiming at a majority interest.
At this point two things had become evident. First, the Government was so far following through on the logic of its stated position on national control over natural resource , by aiming at the largest resource-based industry in the country. This readiness to respond to the logic of its position was to pressage the subsequent decision to nationalise in the face of Alcan intransigence. The second was the Government’s intention to equip itself as thoroughly as possible with technical knowledge and preparations, before beginning negotiations with the bauxite companies. A team was assembled which drew upon the most experienced and expert officers in the Government service in the fields of geology. economics, taxation, statistics and accounting. In addition, two West Indian academic who had done work in the economics and political sociology of bauxite were utilised as advisers. The team was given a relatively free hand by the Government in discussing, evaluating and recommending various alternative strategies for participation. And although the companies were ready to begin negotiations from April, the Government’s seriousness was indicated by its willingness to wait for months while it technical officers prepared themselves and gained the knowledge and expertise necessary for the negotiations.
As the months passed the initial apprehensneness of these men al the enormity of the task handed them by the politicians was replaced by an attitude of growing confidence and excitement at the prospect or accepting responsibility for a nationally controlled bauxite industry. From an evaluation of participation agreements in Chile and Zambia a number of things became clear to these officers and to the Government. This was that multinational mining companies, in the countries conceded a Government majority interest in return for certain significant Government concessions. First of all the companies retained control over the operation by means of management contracts and minority shareholders rights which gave them the rights to name the top managerial posts in the enterprise, and vetoes over important decisions relating to finance and production policies. Secondly the companies secured a superior financial position as a result or Government participation by getting the Government to cut taxes and control over profits remittances, by securing expansion financed by the Government or third parties and by securing a favourable valuation of the asset to be acquired and the means of payment for these assets. For example by securing a valuation of their assets at market valuation, with payment over a relatively short period of time at a commercial rate of interest. Government participation could be made financially favourable to companies and by the same token, unfavourable to Government. (9) ·
Thus the Government of Guyana became. convinced that an agreement containing the control and the financial aspects of the Chilean and Zambian models would be both technically unsound and politically dangerous. This conviction was to underly the most important of the points subsequently stated to be non-negotiable by the Government in the Demba talks. (10)
But having decided this, the next logical step had to be faced, and it was this: suppose the company, faced with Government non-negotiables on the most important points, decided not to agree: suppose it pulled out, wrote off Guyana, or simply refused to agree to the Government’s position. Then Guyana would be faced with the task of running the industry on its own, either because the company had pulled out or because the Government would have to impose a solution. In other words, the Government would have to be prepared to nationalise, as part of its preparedness for participation. Otherwise, the Government would be negotiating from a position of weakness and the negotiations could hardly be taken seriously.
In effect then, what took place in the month s preceding the negotiations was the emergence and growth of the psychological preparedness for nationalisation by politicians and technicians alike. And inevitably this led to the identification and preparation of the physical steps necessary for the implementation of any decision to nationalise. From quite early in the exercise a preliminary evaluation had been made of Guyana’s capacity to market and attract personnel independently. One thing that became evident from this exercise was the conviction that the world had sufficient need for the products of the Guyana bauxite industry outside of the Alcan system, and sufficient expertise, to make an independent industry commercially viable. The second was that, in spite of this there could be no absolute certainty that Guyana would be able to maintain its exports, especially in the short run, at a level sufficient to avoid serious dislocation. Beyond a certain point therefore, the decision to nationalise would have to be a step into the uncertain , and one that could only be made if both Government and people had the confidence to manage and make sacrifices which distinguishes the man from the child, the independent from the colonial.
It was around this point that the most agonising arguments took place at the technical level. Ultimately the question was resolved by the politicians, for the simplest of political reason: ” I prefer” remarked the Prime Minister, ” to take on Alcan rather than the people of Guyana”, and, on a not her occasion “Comrade, it is better to die on your feet than to live on your knee”. Thus by the time negotiations began in December there were few in the Government who did not recognise that the Government might be faced with the possibility of applying the ultimate sanction – the “Tek all” advocated by Dr. Jagan’s PPP and Dr. Thomas of the Ratoon Group – although at the time it could not publicly embrace the possibility as it was committed then to the principle of negotiating. And in following up on this, serious studies began to be prepared on the implications of a Government take-over for working capital foreign exchange, supplies and marketing, as well as the legislative implications.
