On 3 December, Venezuela held a referendum on its long-standing territorial claim to the Essequibo region of Guyana. Although the opposition said the turn-out had been extremely low — around 10% — the Caracas government claimed a landslide 95% support for its position and proceeded to announce a series of aggressive steps. These included requesting that the National Assembly legislate formally annex the territory and ordering the state-owned oil and mining company to issue exploration licences covering areas within the Essequibo, as well as announcing the creation of a new state-level administration. Guyana’s President Irfaan Ali described the referendum as ‘a direct threat to Guyana’s territorial integrity’. Brazil, which shares borders with both countries, said it was stepping up patrols and sending troops and 20 armoured vehicles to Boa Vista, a border town in the state of Roraima. A Brazilian army statement said the aim of operation was to ‘guarantee the inviolability of the territory’. 

The dispute is centuries old, dating back to a border conflict between the Spanish and British empires in the colonial era. More recently Guyana has called on the International Court of Justice (ICJ) to adjudicate, while Venezuela refuses to recognise its authority to do so. The Essequibo covers 160,000 kms² representing about two-thirds of Guyana’s total territory. It is a sparsely populated but mineral-rich area inhabited by about one-fifth of Guyana’s population of 800,000 people. The dispute lay dormant for many years but has flared up again, at least in part due to the 2015 discovery of large oil deposits in Guyanese waters by ExxonMobil and other oil companies. Guyana is enjoying an oil boom which has made it one of the world’s fastest growing economies. Meanwhile the far-left government of Venezuela in recent years has presided over one of the world’s fastest contracting economies. Venezuela has experienced a dramatic recession and falling oil production, due to a combination of reckless mismanagement and US economic sanctions. Nationalism however remains an important factor in Venezuelan politics and there is a suggestion that President Nicolás Maduro may be using the Essequibo issue to try and increase his chances of winning re-election (elections are due in 2024).

For Brazil, tension between its two neighbours has a number of significant downsides. Brazilian exports to Venezuela are small but important: over US$1 billion per annum. Trade with Guyana is virtually non-existent, but this could change as that country’s oil boom continues to develop. Diplomatically Brazil aspires to represent the global south, and to foster an era of peaceful economic development and multilateral diplomacy. To a degree then, the country may lose significant face if it cannot resolve a dispute ‘on its doorstep’. Before the referendum Brazil’s Foreign Minister Mauro Vieira said that his government had asked both countries to pursue a peaceful resolution to the conflict. 

The impact of the dispute on the oil industry is also a major concern for Brazil. Tension and possible military confrontation could affect oil operations in Guyana and Suriname and have a ‘contagion effect’ on Brazil’s own plans to drill for oil in the Equatorial Margin area (see Energy). Weak borders and lawlessness might also encourage further cross-border criminal activity, particularly by drug trafficking cartels.

The most likely scenario is that, aside from possible border skirmishes and localised clashes, there will be no significant military conflict. Guyana will probably rally support from its Caribbean neighbours and, most significantly, from the US which is likely to serve as a major deterrent to any major Venezuelan invasion. China — which has a share of Guyana’s rapidly growing Essequibo oil output — will not support a Venezuelan military adventure. Maduro is therefore most likely to mainly conduct a sabre-rattling exercise which is intended for domestic political purposes. However, the possibility of armed conflict cannot be entirely eliminated: Latin America has a long history of authoritarian rulers who have acted irrationally or impulsively. For the Brazilian government and military, the dispute highlights the need for a stronger security presence in some of the country’s most remote border areas. 

President Lula’s focus will remain on international diplomacy but localised Venezuela-Guyana tensions will be a cause of concern over the next few months. Publicly Brazilian diplomats will present a balanced position, but privately they are likely to strongly dissuade Venezuela and demand progress towards democratic elections in 2024. International scrutiny of Brazil’s position will increase as the country takes over the G20’s six-month rotating presidency. Lula will try and steer the agenda to prioritise peace negotiations — in Israel, Ukraine, and elsewhere — pro-poor economic development, and climate change. 

The December 2023 issue of Brazil Focus also includes the following:

Politics

• Justice Minister Flávio Dino is nominated for the Supreme Court 
• Rumbling in the background: bad blood between Supreme Court and Congress

Foreign Relations

• EU trade deal misses window of opportunity

Security

• Venezuela-Guyana dispute has security implications for Brazil

Economy & Business

• Still growing, but more slowly
• Fiscal performance is gradually slipping
• Some progress on the tax front
• Green light for Sabesp’s privatisation
• Dairy industry planning for the downturn
• Will soya put in another star performance?

Energy Sector

• Brazil is set to join OPEC+
• Petrobras announces 2024-2028 strategy
• More licences on offer 
• Shell is ready to bid in Equatorial Margin
• Implications
• Taking the pulse