Why Politics Matter for Technical Assistance, in Guyana and Beyond

This post is part of the work of the Executive Session on the Politics of Extractive Industries (ES on PEI). The Executive Session is a policy innovation lab led by a group of experts – academics and practitioners – from across the world. Focusing on PEI entails grappling with the ways in which power, interests, incentives and characteristics of political systems shape how extractive industry projects are developed, their ultimate outcomes, and often the fate of governance interventions designed to improve these. The purpose of this group is to produce practical insights, new strategies, and tangible guidance to address a major challenge confronting all those hoping to improve outcomes from extractive industry development: the political aspects of the governance of the sector. 

With the announcement of yet more oil, Guyana is back in the news. Having already confirmed one of the largest oil finds in the past decade, Exxon now estimates it could be producing 750,000 barrels per day by 2025. Guyana already has an economy dependent on commodities, but oil revenues will be on a whole new scale. Hence a rush of articles in the international press asking if the country can handle these expected sudden riches, not least in the New York Times, Financial Times and Economist. I’m sure no Guyanese wishes to read another take on whether they will be the next Malaysia or the next Venezuela.

In contrast, not much is being written about the role of donors and advisers in this context. You can be sure that the Guyanese government has received a flood of offers of support in the past year, some perhaps more self-interested than others. With a small population, as a new producer and with the promise of significant revenues, Guyana will excite those looking to further test such ideas as “oil for cash” transfers.

No doubt the government needs support – there are so many decisions to be made that require full understanding of their long-term implications.  Technical assistance providers have an important role to play, but are they as effective as they should be? One limitation may be a reticence to address not so much the “c” word – corruption, that is no longer taboo in discussions with partner countries – but the “p” word – politics.

Well-crafted policy approaches too often fall afoul of political realities when they need to be passed into law and then implemented. This is already playing out in Guyana – for example, the bill to set up an independent petroleum commission languishes unpassed in the National Assembly. Decisions are already being taken in light of 2020 elections, with the future of the current governing coalition being uncertain.  The large global operators are supported by their home countries, enmeshing regional and global diplomatic relations with the domestic regulatory context. Guyana is following a well-trodden path – political dynamics have constrained the effective uptake and implementation of strategies and reforms in scores of countries that hoped to maximize the benefits from their extractives sectors.  How can development practitioners and policy makers better anticipate and address such challenges?

Part of the problem is implied in the label of “technical assistance” itself. In exploiting oil, few of the decisions to be made are purely technical in nature. Political considerations inevitably influence decisions and debates on everything from whether to publish a contract through to the need for local refining capacity to the merits of a sovereign wealth fund. They impact not just policy and rule design but their implementation (or lack of implementation). Are donors well equipped to support Guyana in a way that accounts for political circumstances?

More so than a decade ago, no doubt. Donor representatives who have a presence on the ground tend to be savvier operators as they get to know local political contexts well. It has become much more common among some donors to commission political economy analyses (PEAs) to inform project design, and governance components of donor projects have become the norm.

And yet there remain limits.

• Many actors are still not factoring political context into their work. A mandate to be apolitical does not mean donors should not think and work in politically savvy ways. More actors need to be persuaded to care about political context and devote resources to navigating political reform dynamics. Others struggle with how to do it meaningfully. It can be difficult to secure internal/external buy-in to do things differently. For example, could a donor get comfortable with shifting timelines, expectations and strategies in light of elections and the corresponding political debates? Would they explore direct outreach to individual political parties to build understanding of policy choices? Could they coordinate across silos – in government and in their own organizations – to focus on whether or how collected and budgeted revenues are actually channeled into public investments for tangible development outcomes?
• PEAs, even where they are produced, are not being deployed as effectively as they could be. Even for those donors that have a presence on the ground, there can be a disconnect between the production of knowledge on local context and its actual use in project design, particularly when it is donor headquarters, not country offices, largely controlling these processes. Moreover, when PEAs are produced and used in the design of donor projects, they are rarely revisited once a project is underway (with a few notable exceptions), despite the possible fluidity of political circumstances. Adapting project support to shifting circumstances is not simple in the world of logframes and incentives that encourage disbursing funds as quickly and smoothly as possible. Yet PEAs can add more value if they inform project design and on-going implementation, even if this means having to rethink/rework some donor processes.
• Good governance interventions tend to be too narrowly understood. Support to governance of the oil sector in Guyana risks becoming focused on transparency, building on the country’s existing membership in the Extractive Industries Transparency Initiative. This is critically important, but transparency approaches will not contribute to good sector governance without being embedded in the realities of their political context and complemented by strategies to address the most important aspects thereof. Similarly insufficient are technical assistance programs based on narrow definitions of good practice that do not address the political determinants of whether, how, and by whom recommendations will (not) be undertaken. Donors, and the governance of extractive industries field, need a broader understanding of what sector “good governance” might entail and more varied strategies for how to get there under different political circumstances. Conventional “best practice” may be a less good fit than another option in a particular context, so flexibility and a broader range of strategies from which to choose are^[1]

For donors who care about the impact of their technical assistance and lending, the costs of inadequately addressing political context can be high. Projects can be delayed, effectiveness undermined, and donor credibility affected similarly. So how can donors better account for political considerations in their advice and financing, including with assistance to non-government actors?

We don’t have ready answers to all the questions. For example, in terms of understanding political context, having a local presence as a donor can be a valuable asset in being able to think and work politically, but it is impractical for many donors to establish local offices in all the countries where they work. So, what could be tried? Can there be a collaborative mechanism to draw on the intel of other funders? Is it sufficient to rely on recruiting a local consultant who can offer a frank local take?

Country partners will benefit from fresh thinking on what politically informed technical assistance and transparency strategies might look like. At the very least donors can and should be acknowledging such challenges and comparing notes. These are the types of conversations that the Executive Session on the Politics of Extractive Industries, hosted by the Columbia Center on Sustainable Investment, can actively foster.

I hope those donors looking to assist Guyana consider what a more politically savvy approach could look like in practice before committing to approaches that might face considerable roadblocks to uptake and effective implementation. Again, worthwhile starting points for a conversation include:

1) how to get more knowledge of local political context into the process even if donors don’t have their own people on the ground;

2) figuring out how to use PEAs more often and better; and, perhaps most importantly,

3) how to innovate in the design and implementation of technical interventions in light of political realities (which may mean doing things differently in different contexts or moments).

Guyana is not just a donor or researcher petri-dish. Its people merit the most well considered support. The institutions providing that support need to be better attuned to political economy considerations.

^[1] As increasingly acknowledged in the literature, not least the World Bank World Development Report 2017 Governance and the Rule of Law.