296. Memorandum of Conversation1

SUBJECT

  • Meeting with Senior Government Ministers—Georgetown, Guyana

PARTICIPANTS

  • Mr. Philip C. Habib
  • Mr. Gavin R. Kennard, Minister of Agriculture
  • Mr. Hugh Desmond Hoyte, Minister of Economic Development and Cooperatives
  • Mr. Hubert O. Jack, Minister of Energy and Natural Resources
  • Mr. Frank E. Hope, Minister of Finance
  • Mr. Clarence Ellis, Chief of the State Planning Secretariat
  • American Ambassador to Guyana John R. Burke
  • Mr. Robert Warne, ARA/CAR
  • Ms. Mary Gin Kennedy, S/PH (notetaker)

Minister of Economic Development and Cooperatives Hoyte opened the August 15 meeting between senior government ministers and Ambassador Habib2 by summarizing Guyana’s current economic situation. He said Guyana had been reasonably successful in meeting the IMF financial targets at the cost of no economic growth. The Guyanese government is serious about reform, and, as a result, is increasingly unpopular. It is not willing, for example, to increase wages in the absence of economic growth. The biggest problem is the increased price of fuel. While Trinidad could help to alleviate this problem, its policy is not to extend credit.

Mr. Habib responded that he was reassessing the US role in the Caribbean, but that his initial impression was that increased economic development was the key to political and social stability. He praised Guyana’s efforts to meet the IMF guidelines as evidence of the political will to make tough decisions. Habib then asked for the ministers’ views on what the US role should be.

Minister of Energy Jack pointed to the pervasive impact of American culture on the region and said that rising expectations were beyond the capability of regional entities to satisfy. In such fragile economies the leaders are unable to deliver goods and services fast enough. The US should direct its development assistance toward development priorities identified by the countries themselves.

In addition to the Westminster tradition, Guyana follows the US lead on human rights, but human rights is a function of the state of a society. Human rights can only occur concomitantly with economic development and not in one big leap.

While there has been an upsurge of radicalism in the region, the US should not be overly concerned because the USSR is not in a position to exploit the situation. The US stand in Nicaragua has earned good will for the US.3

Minister of Finance Hope concurred that the region’s problems were economic and said individual states have a good probability for internal development if they are protected from external difficulties. While monetary assistance is important, the US must help the region to find market access on reasonable terms and use its influence in international forums.

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Minister of Agriculture Kennard said Guyana can make a major contribution to increased food production and self-sufficiency. US assistance in this area has been prompt and reasonably adequate. Guyana’s immediate need is equipment and spare parts which are not available due to foreign exchange constraints. He stressed the need for an AID project to supply equipment and spare parts so that progress in other areas (such as drainage) is not jeopardized.

Jack then asked for sympathetic assistance from the US for Guyana’s application to the World Bank to build the Upper Mazaruni hydroelectric/smelter project.4 He said Brazil has offered to loan Guyana $100 million to study the project. He stressed Guyana may be able to solve its energy problem which tied in with US policy to develop alternative energy sources. The weakening of CARICOM is the result of the economic difficulties of Guyana and Jamaica.

Habib agreed with the ministers on the importance of economic development as a fundamental element of stability and progress. The US maintains a general interest in the capacity of the region to work together. He said he would take an independent look at the hydro/smelter project (but made no promises) and would include the concept of increased food/fiber production in his report. Habib then expanded on US human rights policy by saying the US looks at the direction, not the movement, of human rights policy in a society and at how governments treat their own people. He defined human rights broadly to mean whether or not social development was allowed to occur.

In response to Mr. Warne’s question about CARICOM and integration, Hoyte said the US can exercise its influence by helping to stimulate regional trade and CARICOM, but that there would be no great change until economic problems are solved. It is difficult to get a common strategy on the rational location of industry and the collective use of resources because each leader must deliver to his own people. Many of the smaller islands do not see benefits in integration.

Hope commented that ECCM members have never given CARICOM a chance although the most certain way to increase trade in non-traditional exports was through regional trade. CARICOM can play a substantial role by providing markets for smaller manufacturers. While Guyana has not always benefited, it supports CARICOM and the con[Page 734]cept of an integrated market. Guyana develops a strong manufacturing sector; a strong CARICOM Secretariat provides the framework. Hoyte concluded by saying that the political heads of government must decide on a policy. The US is in a favorable position to help the region develop its own personality.

ACTION: Mr. Habib will take an independent look at the hydro-smelter project.5

  1. Source: Carter Library, National Security Affairs, Staff Material, North/South, Pastor, Country, Box 24, Folder: Guyana, 1/78–8/80. Confidential. Drafted by Kennedy; cleared by Habib.
  2. Habib visited the Caribbean August 12–23.
  3. Documentation on U.S. policy toward Nicaragua is in Foreign Relations, 1977–1980, vol. XV, Central America.
  4. In telegram 214000 to Georgetown, August 16, the Department responded to the Guyanese request for U.S. support, instructing the Embassy to express “our support for Guyana’s effort to develop alternate energy sources, but note that AID has been directed by the Congress to focus on basic human needs, i.e., agriculture, health, and education, leaving the funding of capital projects to the IFIs,” adding that IBRD “officials have told Desk Officer that, while they are sympathetic to the Guyanese request, it will be some time before they will be able to judge the feasibility of the entire Upper Mazaruni scheme.” (National Archives, RG 59, Central Foreign Policy File, D790372–0250)
  5. Not further identified.