On May 5, 2024, Venezuelan President Nicolás Maduro announced the presence of US military and intelligence bases in the Essequibo region, a disputed territory between Venezuela and Guyana. This announcement marks a new escalation in the ongoing dispute over the region, which has gained significant importance following recent major oil discoveries.
Motivating Factors
The current dispute between Guyana and Venezuela can be understood through several factors:
1. Significance of Essequibo:
The conflict's roots date back to 1824, when Venezuela claimed the territory, asserting it as part of its land rather than belonging to Guyana. After decades of negotiations and discussions, the issue was taken to international courts, but the region has remained under Guyanese control.
The Essequibo region spans approximately 160,000 square kilometers, representing about two-thirds of Guyana's territory, and is home to around 125,000 people. Venezuela argues that the Essequibo River to the east is a natural boundary recognized since 1777 during the Spanish Empire, thus Caracas demands the area. On the other hand, Guyana maintains that the borders were delineated by an arbitration committee in 1899 during British colonial rule.
In early 2015, the conflict reignited due to ExxonMobil's discovery of significant oil reserves in the offshore area near Essequibo under licenses granted by the Guyanese government. These discoveries are among the largest globally in the past decade. According to a 2023 report by the United Nations Economic Commission for Latin America and the Caribbean on foreign direct investment, these oil discoveries are projected to generate substantial revenues for Guyana, potentially making it the world's fourth-largest offshore oil producer by 2035, surpassing countries like the United States, Mexico, and Norway. Consequently, Guyana's GDP is expected to increase by about 58.7% by 2027, with oil already accounting for over 65% of the country's exports. The report also highlighted that Guyana's oil has a high competitive advantage in the hydrocarbon market, with most of its oil resources being light crude with lower-than-average carbon emissions and low extraction costs.
2. Venezuela's worsening crises:
Analysts link Venezuela's interest in the region to its current political and economic crises. Economically, Venezuela's significance in the global oil market has sharply declined in recent years due to mismanagement and corruption in its oil sector, coupled with US sanctions. The latest sanctions, announced in April by a senior US official, included withdrawing licenses for the Venezuelan oil and gas sector, negatively impacting the country's economy, which heavily relies on oil exports that constitute about 65% of the government budget, estimated at around USD 15 billion this year.
Politically, President Maduro aims to use the issue of annexing Essequibo to unify public opinion and boost his popularity, framing it as a national security issue. This is especially important as he faces strong right-wing opposition led by María Corina Machado, who is expected to run against him in the presidential elections.
Mutual Escalation
Recent actions reflect the escalating tensions:
● Venezuela has undertaken escalatory measures to legitimize its claim over the disputed region, including the construction of a military airstrip and training ground near the Essequibo border. President Maduro ordered state oil companies to issue licenses for oil exploration in the region and, in December 2023, mentioned that 6,000 Venezuelan soldiers, including air and naval forces, would conduct joint operations off the eastern coast near the Guyanese border in response to the UK's deployment of a warship to Guyana's territorial waters.
● Caracas held a referendum on December 3, 2023, in which 95% of participants supported annexing the region and rejected the jurisdiction of the International Court of Justice (ICJ), which handles the border dispute. Consequently, President Maduro approved a parliamentary plan to annex the Guyanese-Essequibo territories, designating them as Venezuela's 24th state. Venezuela also released new maps showing the region as part of its territory and appointed a military general as its governor, alongside issuing Venezuelan ID cards to residents in the area.
● Guyana, for its part, considers Venezuela's annexation of Essequibo a threat to its territorial integrity, raising the risk of armed conflict between the two neighbors. Guyana reaffirms its right to the region and continues to grant exploration and drilling rights to international oil companies, with ExxonMobil announcing plans to increase production in offshore fields near Guyana.
● In this context, Presidents Maduro of Venezuela and Irfaan Ali of Guyana met in Saint Vincent and the Grenadines on December 14, 2023, in the presence of regional parties. Both leaders pledged not to use violence but failed to reach an agreement on resolving the territorial dispute. Guyana insists on settling the matter through the ICJ, while Venezuela does not recognize the court's jurisdiction.
Possible Scenarios
There are three possible scenarios for the crisis in the Essequibo region:
1. Opening a new war front:
Analysts predict that the tension will escalate, leading Venezuela to launch a military offensive to annex the region, prompting intervention by various international parties. This potential escalation could exacerbate the conflict, prolong it, and expand its scope, thereby threatening regional security and stability in Latin America. Such a scenario could spark a proxy war, with the United States supporting its ally Guyana while China and Russia back Venezuela. Such an escalation would open a new front in the United States' backyard, similar to how the US supports Beijing's rivals in the South China Sea and opposes Russia in Ukraine. This situation would further complicate matters and turn the dispute into a major geopolitical flashpoint akin to Ukraine.
This view is supported by a significant increase in Venezuela's defense budget related to the Essequibo region. President Maduro's decision to officially include the defense of Essequibo in the 2024 budget indicates the central role of this issue in the state's strategies. While Guyana seeks support from friendly countries, Venezuela claims it is ready for defensive action. This comes amidst estimates highlighting Venezuela's military superiority, with about 120,000 military personnel compared to approximately 3,600 in Guyana. In this complex scenario, the risk of escalation remains high.
2. Impossibility of war:
Assessments suggest that war is almost impossible because an actual invasion of the Essequibo region would be a desperate task. The region is largely a dense wild jungle with inadequate road infrastructure and population centers, hindering the movement of Venezuelan military vehicles and equipment. Additionally, the United States is distracted and exhausted by the ongoing wars in Ukraine and Gaza, making it difficult for Washington to open a new geopolitical front in Latin America. Russia, China, and Iran would be the primary beneficiaries of any US military action against Venezuela, thus pushing the US towards avoiding escalation.
Brazil's stance against war also supports this scenario. Brazil aims to establish itself as a regional power and an emerging global force, meaning it does not want a war in the continent that could negatively impact its ambitions and goals. Brazil has, therefore, reinforced its military presence on the border with Guyana to prevent any escalation and reject any military moves by Venezuela, emphasizing diplomacy as the main option for resolving the dispute. Brazilian President Luiz Inácio Lula da Silva has communicated with his Venezuelan counterpart to express opposition to any potential military escalation, securing promises from Venezuela not to use Brazilian territory for military operations or violate any agreements between the two countries during attempts to annex the region. Nevertheless, the Brazilian military has strengthened its presence in the border area amid rising tensions between Venezuela and Guyana.
3. Freezing the conflict (most likely scenario):
This scenario expects the ongoing exchange between Guyana and Venezuela to continue without any major decisions until the International Court of Justice (ICJ) makes a ruling, to which Guyana has resorted. Venezuelan President Maduro is anticipated to continue limited and calculated escalation until the presidential elections are over to stir national sentiment and ensure popular support, believing the country is at a critical juncture needing internal unity for his re-election. A war could later cause widespread dissatisfaction among Venezuelans due to its expected negative repercussions, potentially reviving the opposition and bringing its former leader, Juan Gerardo Guaidó, back onto the scene.
Moreover, Venezuela also realizes that despite its desire to avoid escalation between the two countries, the United States would not tolerate any military action against Guyana, especially with the U.S. Southern Command reportedly planning to establish a military base in northern Essequibo. This consideration drives Venezuela to proceed with extreme caution while making military threats. Additionally, Venezuela seeks to gain some oil-related benefits by re-engaging with US oil companies, thereby easing American sanctions.
This scenario is further supported by the expectation that Russia, Venezuela's key ally, cannot directly involve itself in any conflict in Latin America over the border dispute between Venezuela and Guyana. Moscow understands that the US is a superpower with regional interests and would likely avoid any confrontations. However, this does not negate the close relations between Russia and Venezuela across various military, economic, intelligence, and logistical fields.
In conclusion, the situation remains dangerous for Latin America despite Venezuela and Guyana agreeing not to use force in the territorial dispute. The conflict is not limited to the original parties but has become a significant part of the global struggle between the US and its allies on one side and China and Russia on the other. Given the historical sensitivity of the region to the United States, any military action there increases the risks. Therefore, regional and international mediators are expected to intensify their efforts to contain the situation and prevent the conflict from escalating.
