THE TRANSFORMATION OF THE SPHERE OF GOVERNANCE IN

DEVELOPING SOCIETIES

Examining Guyana’s Transformation

Sir Arthur Lewis Conference

University of the West Indies

Cave Hill

Barbados

January 17-19th 2003

Mellissa Ifill

Department of History

Faculty of Arts

University of Guyana

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This paper reviews the transformation in the sphere of governance that occurred in the

1980s and 1990s in developing states, with particular emphasis on Guyana. Commencing in the

1980s and increasing in the 1990s, developing states employed a number of approaches to transform

their political sphere, and, the international financial and development institutions participated

through their structural adjustment programmes in facilitating this change. This paper argues that the

end result of the political transformation was the deepened incorporation of peripheral economies

into the world economy, which in turn guaranteed the continued smooth operation of the world-

system in the interest of the hegemonic core. This paper further contends that the makeovers of these

societies were deliberately restricted. They were not designed to produce revolutionary changes in

developing societies, but rather changes, just sufficient to serve the interests of the hegemonic core.

Structural Adjustment Programmes (SAPs)

Structural adjustment programmes (SAPs) refer to a package of liberal policy measures

initially and primarily prescribed by the International Monetary Fund (IMF) and the World Bank.

These measures are endorsed by other international and regional development and financial actors

and seek to address the Third World debt crisis which emerged in the 1970s and which continues to

plague and inhibit the developmental efforts of indebted states. In exchange for accepting and

implementing these liberal economic measures, indebted states receive balance of payments support

or financial assistance and endorsement for debt rescheduling with international creditors

(Boughton and Lateef 1995; Glover 1991; Nurse 1997).

The two major strategies utilised in structural adjustment programmes are (i) stabilisation

and austerity and (ii) structural reform. These strategies are guided by neo-classical economic

principles and in the main place great emphasis on measures that address presumed internal

deficiencies within indebted states in order to correct imbalances in the fiscal and trade accounts.

Consequently, SAPs stress the necessity of certain measures. These include external debt policies,

monetary and fiscal restraint policies, privatisation, trade reforms, financial reforms, currency

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devaluation and deregulation (World Bank 1992a; Rapley 1996; Nurse 1997, Garritsen de Vries

1987).

The stated aim of structural adjustment policies is to achieve stable and structurally

sound economies in developing societies. The international financial institutions claim that for

that condition to be achieved, there must be further integration of indebted states into the world

economy. Therefore the IMF and World Bank propose measures which represent a departure

from the nationalist, inward-oriented and import-substituting industrialisation (ISI) policies

adopted by developing countries in the 1960s and 1970s. They argue that these ISI policies,

which were centred on isolationist and protectionist policies, reduced competition and the optimal

allocation of resources. They further argue that indebted states will remain trapped in the crisis

and will not be able to fast forward development unless they implement outward or export-

oriented policies and encourage the emergence of domestic entrepreneurs (IMF 1990; Bird 1995;

Friedman 1987; Jayarajah and Branson 1995; Nurse 1997; Nurse 1992).

It is important to note that the debt crisis and the need for structural adjustment

programmes (SAPs) did not emerge in a vacuum. The emergence, imposition and implementation

of SAPs occurred within a particular context and at a particular conjuncture in the world

economy. SAPs emerged when the capitalist world economy was experiencing a number of

transformations and crises in its socio-political, economic and institutional structures and roles

due to technological advancements and the globalisation of the world economy. These changes

and crises have had severe repercussions in both industrialised and developing economies.

Internally, the developed market economies have been faced with structural and technological

unemployment, a greater disparity in wages and a relatively weak negotiating position for the

labour movement. Among these industrialised economies, these changes and crises have

generated economic rivalry, neo protectionist policies and intense rivalries for market shares

through the establishment of regional trading blocs.

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The impact of these developments on developing societies was even more devastating.

Developing states suffered from decreasing terms of trade, the substitution of many peripheral

primary exports by artificial alternatives, and, the restriction to the latest methods of peripheral

specialisation such as export oriented industrialisation. The effect of the latter was greater depths of

external dependency, de-industrialisation, increased unemployment and, distributive problems

which in turn, stimulated greater external indebtedness eventually resulting in debt crises. The latter

then required debt administration, hence structural adjustment programmes (Nurse, 1997).

SAPs dealt with the debt and development crises faced by peripheral societies by

prescribing economic respecialisation and political restructure. Generally, peripheral states have

swiftly transformed and adjusted their orientation to one that embraces market friendly approaches

(Edwards 1995) and democratic governance, and, as a consequence have been further incorporated

into the world-economy, cognisant of and abiding by world-system rules.

Good Governance and SAPs

This paper focuses on the political restructuring that SAPs facilitated, utilising the concept of

incorporation articulated by Wallerstein and Hopkins (1987), who argue that transformation in the

sphere of governance was intended to modify state structures in such a manner that they functioned

as constituents of, and within the practices of, the interstate system. This meant that it was required

that they behave as members of the interstate system, mindful of its laws and restrictions. This was

necessary because these laws were crucial to the preservation of the capital accumulation process.

The world-economy was confronted with two competing political systems after the Second

World War - capitalist democracy and socialism - with these two systems competing for newly

sovereign states. One of the dominant features of socialism is pervasive state management of the

commanding heights of the economy. In this system, the state largely directs the operation of

markets. In other words, the state owns and/or controls industries, with the private sector often

assuming a comparatively minor role in these societies (Rapley 1996).

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On the other hand, according to Richard Joseph (1997, 367), the democratic capitalist

system was linked to a “series of paradoxes”. First, it is formally based on civilian rule, however

when arriving at key decisions, especially in the area of economic policymaking, it is divorced

from active public involvement. Second, is the creation of opportunities for the increased

development of a capitalist or market economy1. Third, notwithstanding the assumption that the

principal organisations and customs of modern democracy are based on the unimpeded

interaction of ideas and interests, in practice, specific substantive policy outcomes are excluded,

while others are assured. While participation may be extensive, policy options are restricted

(Joseph 1997).

As a consequence of the technological and economic success of the democratic world,

coupled with the disintegration of the Soviet Union, democratic forces focused their attention on the

institutions of democracy in regions previously under authoritarian rule. The international financial

institutions supported this movement. In fact, Herman Cohen credits the IFIs with being more than

simple supporters of this movement. He argued “the beginning of the movement for democratic

change in Africa coincided with, and was stimulated mainly by, structural adjustment, which

realigned economic power from urban elites to rural populations and the business community”

(Cohen 1989, 7).

Lindenberg and Devarajan (1993) argue that from the early 1970s, developing countries

increasingly employed democratic forms such as multi-party competitive elections, and also

expanded civil and political liberties. For instance, between 1973 and 1989 the percentage of

developing states having competitive elections for top officials rose from 19 (of ninety- three

countries) to 412.

1 Whereas it is possible for capitalism to survive in the absence of democracy, no current democratic states exist that do not operate under a capitalist system or, do not establish the cultural environment for the further development of capitalism. 2 The most notable changes happened in Latin America and Asia, where the proportion of democratic regimes grew from one-third in 1973 to more than two-thirds by 1989. In Latin America, the most dramatic shift took

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In effect, that period of severe world economic crisis - 1982 to 1988 when developing states

were experiencing debt crisis and consequently implementing structural adjustment programmes -

coincided with the increasing emergence of political democracy whereby citizens were granted

increased civil and political liberties. Greater economic liberties and the protection of private

property supported the latter. New democracies swiftly transformed their production spheres and

opened their economies to private -often foreign - investment. In many instances, foreign resources

replaced domestic resources, with foreign firms primarily producing for export (Lindenberg and

Devarajan 1993).

The concurrent incidence of IFI participation in developing economies and the acceptance of

political democracy by these states imply that there was some degree of political overtones in World

Bank and the IMF policies (see Swedberg, 1986). Up to the late 1980s however, the IFIs were

adamant that their concern was not the political orientation of their clients and referred to their legal

obligation to remain politically neutral and to entirely base their decisions on economic grounds

(IMF 1988) 3.

By the early 1990s however, the IFIs position on interfering in the political realm was

shifting with their insistence that indebted states practice “good governance”. To facilitate this,

the IFIs tied official aid disbursements to the quality of governance (Moore 1993a). The World

Bank subsequently went further, recognised the innate contradictions in its previous interpretation

of its Articles of Agreement, and attempted to increase its capacity to include the bigger concerns

place between 1980 and 1989, when the number of democratic regimes almost doubled. In Asia the shift to democracy occurred more evenly across the periods 1973-80 and 1980-89, while in Sub-Saharan Africa the Middle East and North Africa only really experienced an expansion in democracy in the early 1990s (Lindenberg and Devarajan 1993). 3 Up to this point, the World Bank insisted that the form of political regime in borrowing states did not significantly influence their lending. For example, they argue that they disbursed approximately the same amount of funds to the Philippines during the Corizon Aquino democratic period as it disbursed during the Ferdinand Marcos' authoritarian regime. They admit that for China, loans were conditioned on political transition - and that was due to the US convincing the World Bank's Executive Board against the wishes of the Bank’s management to cease loans to China for a period after the Tiannanmen Square outburst. Generally however, the Bank argues that it was not greatly influenced by democratic changes when determining the size of loans to developing countries (Haq 1995).

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of economic and political administration in the form of national governance. After receiving a

new interpretation of its Articles of Agreement from its General Counsel, the World Bank then

defined governance as " the manner in which power is exercised in the management of a country's

economic and social resources for development". The spheres in which Bank interference was

justifiable thus included

weak institutions, lack of an adequate legal framework, weak financial accounting and auditing systems, damaging discretionary interventions, uncertain and variable policy frameworks, and closed decision making which increases risks of corruption and waste... monopolies allocated to friends of those in power... discrimination against certain ethnic groups... lack of public accountability, corruption, and the "capture" of public services by elites (World Bank 1992b, 3).

Although political orientation, human rights abuses and excessive military expenditure are

not directly referred to as reasons for interrupting loan pledges, the Bank in the early 1990s started to

address these issues4 (World Bank 1992b, 46). This was evident in their revealing statement that

"projects... may be technically sound but fail to deliver anticipated results for reasons connected to

the quality of government action" (Quoted in Haq 1995, 148).

The position adopted by the Bank has in effect created the conditions under which almost

any decision taken with respect to indebted states can be defended and justified. When loans are

disbursed to "non-democratic regimes" that are prepared to apply their liberal reform prescriptions,

the Bank can argue that their role is not to consider explicitly political factors when determining

whether to dispense loans. What this suggests, is that they are disposed to ignoring authoritarianism

practices with respect to the local citizens, once international capital is allowed to operate unopposed.

The implementation of structural adjustment prescriptions therefore has the consequence of

fashioning states that are tough enough to deal with internal forces that attempt to frustrate capitalists

when harsh economic measures are being applied. On the other hand, these prescriptions

4 In November 1991 for instance, the Bank decided to suspend its aid consortium meeting for Kenya until that state arranged new multi-party elections and checked its uncontrolled corruption. The Bank claims that it is increasingly realising that the quality of governments, not just the quality of projects, proves decisive (Haq 1995).

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simultaneously fashion peripheral states that are not strong enough to stop inflows of international

capital, labour or commodities (Wallerstein 1984a, 1984b).

As Jorge Nef argues, the World Bank’s strategy of "governance" actually involves the

numerous devices used by political elites to govern their societies more efficiently and prevent

widespread challenges to the status quo5. Nef further contends that structural adjustment

prescriptions fit perfectly into the neo-liberal governance mould. The liberal democracy promoted

under SAPs relates processes of participation and competition to a particular type of economy, and a

preferred state structure. Under the latter, democracy is narrow and relies on repeated usage of

certain devices of authoritarian control, such as restrictions on the unionisation of labour and popular

mobilisation. Corporate needs take precedence over the needs of labour and other social groups (Nef

1993). Democracy thus secures the safety of the modern capitalist economy by providing the

political framework that guarantees the unimpeded operation of free markets across the world

(Huntington 1991). Analyses of democratic transitions in Southern Europe and South America

confirm the thesis that deradicalisation and even demobilisation of popular forces are central to late

20th century democratisation as advocated by the IFIs and other core capitalist actors. Citizens in

countries that are moving from socialist to democratic systems are advised to solve grave social,

economic and political issues through political participation. Economically disadvantaged sections of

communities are told to seek their interests through elections and parliamentary procedures, and

defer satisfaction of their economic and social needs to an undetermined future (Joseph 1997; Nef

5 Nef suggests that governance in the liberal sense is connected to the modernisation or Westernisation experience. In this instance, public demobilisation and social stability are necessary prerequisites for protecting the interests of Western and Westernised elites. Nef further posits that governance was created as the answer to a "crisis of democratisation" emerging from too much participation in the political process. According to the governance argument, political liberalism, identified by universal suffrage and popular democratisation, ultimately results in riots and instability. These then jeopardise the base of economic liberalism, that is, private property and socio-economic inequality. To protect the socio-economic hierarchy, the adherents of economic liberalism contend that democracy ought to be limited to "responsible" demands. This idea of governance, according to Nef, suggests that major dilemmas of government are viewed as inadequate representation and limited involvement in decision-making. In addition, political involvement, availability, fairness and justice are not considered as being limited to the formal arena of ‘things public’ (such as elections) however as continuing into the spheres of social action and economic affairs (Nef 1993, 2-3).

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1993; Huntington 1991). They are urged to endure present material inequalities while economic

restructuring is being implemented. This economic restructuring however, deepens the very market

based strategies that protect the vested interests of core capitalists, and relegates the resolution of

their problems to a mythical future date.

Examining Guyana’s Transformation

At the beginning of the 1970s, the PNC government officially put forward the socialist

ideology that would radically transform and guide the social philosophy, policies and

programmes implemented over the next decade and a half (Burnham 1974; Burnham 1970a;

1970b). By the late 1970s, the state owned and managed over 80% of the economic activities in

the country (World Bank 1992d).

The socialist experiment conducted by the Guyana government was stymied by the

emergence of a catastrophic debt crisis in the late 1970s that threatened the very survival of the

state. In attempting to resolve the debt crisis and drastic economic deterioration that crippled the

Guyana economy from the late 1970s, the government of Guyana approached the Bretton Woods

institutions (Thomas 1982). However, support from the international financial institutions was on

the condition that the Guyana government shifts its economic posture from a socialist back to a

capitalist one, and the government seemed unwilling to initiate such a shift. The government

made open statements that confirmed its adherence to co-operative socialism, it avoided

implementing liberal economic prescriptions, and carried out a fierce anti IMF campaign

criticising this institution’s excessive interference in the domestic economy. These actions

strained the relationship between the government and the international financial institutions and

by mid 1982 the IMF involvement ended, while in 1984, the World Bank’s SAL concluded

without any noticeable and calculable result. Meanwhile – and as a consequence of its growing

external debt difficulties – Guyana had amassed huge arrears to the Fund from the past utilisation

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of credit facilities. The incapacity to service its debt almost resulted in a complete breakdown of

the relationship between the Guyana and the Fund when in 1985, Guyana became the first

member country to be deemed ineligible to access the Fund’s credit resources (Harrigan 1991).

With the death of Forbes Burnham in August 1985, and the accession of Desmond Hoyte

to the president’s office, the new administration quickly demonstrated that it was keen to

implement policy changes in the domestic economy. The measures implemented were

incongruent with the co-operative socialist ideology that the PNC had previously advocated. The

Hoyte administration also stated its commitment to a market-oriented development strategy that

would involve the improvement of their relationship with the Western financial community.

Evidence of the latter was seen in 1986 when the relations were re-established with the IMF and

the World Bank. A number of factors made the shift from a socialist oriented strategy to a

capitalist oriented one necessary. One of the most important factors was the severity of the socio-

economic crisis that confronted Guyana. The external debt burden was crippling and this was

intensified by the continuous increase of arrears to all its international creditors. The state was

unable to generate enough foreign exchange to service the debt. Due to the state’s

uncreditworthiness, it was virtually impossible to acquire any external funding. The Hoyte

administration knew that before the introduction of any economic reform programme, it was

absolutely essential to source external funding. The administration was further aware of the

reality that it would not be able to acquire financing from international creditors, unless it

repaired the relationship that existed between the state and the IMF and the World Bank, since

international creditors premised their interaction with developing states on the acceptance of

structural adjustment prescriptions under the guidance of the two international financial and

developmental institutions.

The Guyana government thereafter commenced negotiations with the Fund and the Bank

in the first months of 1986. The formulation of a Policy Framework Paper (PFP) was completed

by 1988 and the Bank and the Fund approved the formal programmes for Guyana in the second

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half of 1990. After formulating the PFP in 1988, Guyana was required to put into action an IMF

supervised agreement that was approved in April 1989. On the basis of IMF approval, bilateral

donors indicated their readiness to grant some measure of financing (Greenidge 1990; Ferguson

1995).

The donor community devised a programme for Guyana using a strategy that was used in

the late 1980s to deal with countries with similar conditions to Guyana’s. This strategy was the

Intensified Collaborative Approach, which necessitated a co-ordinated approach by the major

players in the international financial system to financially support those states that implemented

strong liberal economic programmes and took steps regularise their relationship with the Fund

(Ferguson 1995).

Guyana’s structural adjustment programme was expressed in the broad economic strategy

of the Economic Recovery Programme (ERP) that officially commenced in early 1989, following

which, a number of strategies were implemented between 1989 and 1992. The ERP had two

major features. One concentrated on external financing and the other on the economic measures

to be implemented as a condition for this financing to be continuously secured. Guyana required

external financing for balance of payments assistance, to reschedule the unpaid debt, and to settle

the country’s arrears to the IMF, World Bank, CDB, and the Caribbean Multilateral Clearing

Facility. These had to be satisfied before Guyana could become eligible for credit from these

institutions since with a history of heavy default she had been declared ineligible for further

loans.

Under the structural adjustment implemented in Guyana, a number of policy and operational

measures were employed. The main measures included devaluation of the exchange rate, price

deregulation, wage control in the public sector, increased bank rate, and privatisation.

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Structural Adjustment and Governance

Structural adjustment was also linked to the concept of governance from the early 1990s.

The concept of governance and the political practice informed by it gained great legitimacy in

Guyana as a result of the disastrous consequences of the socialist-oriented state-led development

strategy and the collapse of its intellectual pioneer the Soviet Union. This legitimacy was further

strengthened by the efforts of local forces who vociferously advocated democratisation.

Ferguson (1995) notes that in Guyana, several aspects of governance were addressed as

part of SAPs including the institutional, technical and political dimensions. At the institutional

and technical levels - which addressed how the affairs of the state are administered and the

quality of management and institutional capacity of public agencies - good governance translated

into: drastically diminishing the role of the state in economic affairs; public sector reform;

building structures of accountability and transparency in public sector operations and

transactions; and establishing an effective judicial framework. The international financial and

developmental institutions supervised these aspects of the governance assignment.

Politically, governance addressed the manner in which citizens were governed and

translated into the implementation of competitive multiparty elections, a growing regard for

human rights and an emergent civil society. Donor governments on a bilateral level managed this

aspect of the governance phenomenon (Ferguson 1995).

Institutional and Technical Component

By 1988, due to a socialist-oriented nationalisation programme that had been undertaken

in the 1970s, the Government of Guyana controlled over 80% of recorded import and export trade

and 85% of total investment. This statist development strategy was abandoned under the IMF/

World Bank sponsored SAP. At the core of structural adjustment programmes globally was a

redefinition, in essence reversal, of the roles of the public and the private sectors in facilitating

development.

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Under the new development wisdom, one aspect of good governance was the reduced

role of the state in economic activities. In mid-1988, it was announced that government policy in

Guyana would be redirected. Specifically, this policy articulated that the government would

reduce its involvement in economic activities. A privatisation programme was therefore started

under which - over the next three years - a number of government managed industries and sectors

were sold, closed, leased or were being prepared for complete or partial privatisation (World

Bank 1993a). These state owned agencies were privatised by international, regional and local

companies such as the US Virgin Island based Atlantic-Tele-Network and CLICO Trinidad Ltd

(Stabroek News February 24, 1991 “Government Proceeding With Divestment of State

Businesses.”) In addition, a number of initiatives were also implemented to train and equip the

local private sector to function as the primary stimulators of the economy (World Bank 1993b;

Stabroek News, Tuesday August 27, 1991 “President Announces Major Concessions for the

Private Sector”).

This privatisation process which was started by the PNC was continued under the PPP,

although the latter had a demonstrably less vocal commitment to market reform. A number of

party leaders, including Cheddi Jagan had publicly stated their commitment to socialism after

acquiring power. Nonetheless, the agreement between the IFIs and the government compelled the

latter to continue the privatisation process and the private sector in Guyana continued to expand.

This wavering stance was noted by the civil society authors of the National Development Strategy

(1996) who stated that although the government lacked a comprehensive policy, it however

introduced measures that have courted the private sector, in particular the commercial and service

sectors, and have resulted in the creation of jobs in the private sector.

International financial and developmental institutions also advised that good governance

would also be promoted through public sector reform. As early as 1983, the IFIs opined that the

administrative capacity of the public sector required crucial adjustments to reflect the latter’s new

role in the political economy of Guyana (World Bank 1983). Initially, public sector reform meant

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a programme of restructuring ministries, eradicating overlapping tasks among government

departments and readjusting their activities to facilitate enhanced economic management. For

instance by mid 1991 the number of government ministries had been reduced from 18 to 11 in

addition to which, dispensable designations within the reduced ministries were eliminated.

Further, a limited number of specified professional categories including medical doctors and

teachers were separated from the general public service to make easier the payments of higher

salaries to these professionals (World Bank 1993c; Stabroek News February 14, 1991 “New

Ministries designed to Avoid Overlapping, Fragmentation”).

These measures, although necessary, were however inadequate to address the structural

deficiencies and crisis which gripped the public sector. Evidences of the crisis included lack of

professionalism, corruption, lack of transparency and accountability, acute shortage of skills at

higher grades, overstaffing at the lower grades and inadequate salaries and emoluments - all

resulting in a demoralized, politically dominated public service.

The public sector reform process continued in the post 1992 period. A number of

international organisations via a number of programmes have provided support for this process

including the Overseas Development Agency through the Public Service Reform Project, the

World Bank’s Public Administration Project, the Interamerican Development Bank’s Public

Sector Reform Strategy and CIDA’s regional project on the same theme. In the late 1990s, the

government and these IFIs established a Public Service Reform Committee, whose task was to

devise a public sector reform strategy in order to create a public service which was functional,

proactive and which could support a private sector driven economy. Restructuring the public

service has however had a negative impact on workers in that sector. With the IFIs prescribing

among other reforms, wage freeze and the reduction in low-level personnel, workers in this sector

have suffered tremendously under the SAPs. The responses of workers have been sit-ins, protests

and strikes, the most notable being the 55-day strike in 1998. Trade unions have also been

negatively impacted and they are urged to redefine their traditional role to suit the transforming

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local economy. The NDS (1996) authors for instance, have urged unions to work closely with the

government and the private sector in order to increase productivity in recognition of the fact that

employers are faced with a competitive global economy. In other words, to facilitate capitalist

development locally, IFIs and local capitalist interest groups are urging demobilisation and

demilitarisation on the part of the labour force.

Accountability and corruption in the public service was also addressed as another

hindrance to the practice of good governance. The World Bank indicated that the decline of the

public sector was partially “a result of the decline in real wages” (World Bank 1992, xii). One

strategy used therefore to address this was to increase the salaries to sufficiently attractive levels

with the hope of curtailing corruption.

The issue of securing public accountability under a liberalised political climate went

much further than attractive salaries however, since a number of the basic instruments of

accountability had been allowed to lapse or deliberately sidelined under the Burnham regime. For

instance, reviews of the activities of various ministries were hardly held and Parliament had not

been presented with public accounts statements in approximately 10 years (Stabroek News,

Tuesday June 11, 1991 “Auditor General to File Reports With National Assembly”). To improve

these accountability mechanisms, the Hoyte government embarked on a number of initiatives

including enhancing salaries of those in revenue and audit departments, and hiring qualified non-

political personnel to head various departments. These were designed to begin the process of

restoring confidence since it was recognised that this restoration process would invariably be a

long term one (World Bank, 1993a; 1993c).

With respect to reorganising and enhancing the judicial system, not much progress was

made during the period under review although the system was diagnosed as fraught with

problems that included ill-equipped magistrates, inadequate remuneration for court officials,

corruption, backlog on remand prisoners and the subversion of the rule of law in general.

Although many statements were made with respect to the need for reform, this did not translate

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into many visible changes, however, minor gains were made including the enhancement of the

Appeal and Supreme Court libraries though gifts from the international community such as the

British High Commission and the creation of committees to review crucial issues such as judicial

remuneration (Stabroek News June 19, 1991. “British High Commission Enhances Appeal Court

Library”; Stabroek News July 2, 1991 “Judicial Salaries”.)

When discussing the need for a responsive judiciary, international organisations

operating in Guyana continue to stress the impact an ineffective judiciary can have on the

economy. International organisations including the Carter Centre, the British government and

USAID have worked with the members of the judiciary and government with the aim of

strengthening of the judiciary. Significant improvements were therefore made to physical

conditions of the courthouses, the law library of the Supreme Court was modernised and a

number of court reporters have been trained. These organisations have all underscored the link

between a democratic system that protects individual rights and property and a well functioning

judicial system that has the capacity to resolve disputes efficiently. These IFI warn that

international businesses base their decisions to invest on their calculation of risks and the prospect

of predicting outcomes and therefore, if the judicial sector cannot guarantee swift and fair justice,

investors will be reluctant to locate their businesses in the local economy (USAID, 1998).

Political Component

Ferguson (1995) argued that especially during the 1990-1992 period, “it was with respect

to electoral democracy that the interaction between structural adjustment and good governance

was most vividly played out in Guyana”. At the end of 1960, the single most problematic political

concern in Guyana was the conduct of elections and its attendant culture of abuse and subterfuge

that characterized the political system since that time. By the late 1980s, the PNC administration

under Hoyte was forced to address the issue of electoral reform.

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There is evidence to suggest that Hoyte was personally committed to reforming the

political and electoral climate in Guyana and this was seen as early as 1985 when he made a

number of small concessions to opposition parties with respect to overseas and posted ballots

(Stabroek News Tuesday July 30, 1991 Editorial “His Finest Hour.”)6 The GHRA opined

however, that these improvements were “a matter of political convenience rather than

institutional guarantee” (GHRA, 1990, 1). This suggests that the Hoyte administration’s adoption

of ever increasing number of electoral reforms after 1989 were more as a consequence of a

number of factors including: the intensifying campaign locally from opposition groups; the trend

internationally towards free democratic elections; and the increasing linkage of the economic

recovery plan to competitive elections by both local and international actors.

The local groups (both political and civic) that were campaigning for a sweeping

restructuring of the electoral system included the Patriotic Coalition for Democracy (PCD), the

Guyana Human Rights Association (GHRA), the independent media – in particular, the Stabroek

News, and a group of prominent citizens representing religious, professional, business and labour

organizations.

These local campaigners were given increasing external support after 1989. Locals and

their affiliates abroad initially primarily targeted government and legislative structures in major

Western Donor countries (the US, UK and Canada) and the Commonwealth Caribbean. In

articulating their dissatisfaction with the prevailing political climate in Guyana, local campaigners

reminded the major external actors that there was an indisputable connection between structural

adjustment and democratisation. In 1989, the PCD stated that

The IMF and the 8-nation Western Support Group looking into the crucial billion dollar aid for Guyana would do well to insist on democratisation of the society before bringing their aid package on stream. Caricom aid donors and creditors should also adopt this

6 The US State Department Publication of February 19, 1987 entitled “Human Rights in Guyana: An American Assessment” noted that under Hoyte a movement toward political reform and representation had commenced including prohibiting or severely restricting overseas, postal and proxy voting and by increasingly respecting freedom of speech and the right of opposition groups to import newsprint and printing presses.

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principle fearlessly. It is hardly consistent for the powerful western governments who so loudly proclaim the interconnection between democracy and development to pour vast amounts of their taxpayers’ money into an undemocratic and dictatorial regime which continues to hold power through electoral fraud (“Double Standard”. Stabroek News, November 11, 1989).

From the early months in 1990, a large number of external actors (both governmental and

nongovernmental) brought their individual and combined influence and pressure to bear on the

Hoyte regime to force extensive electoral reform. They all publicly and unmistakably alluded to

the connection between SAP and electoral democracy. The most significant and influential

pressures emanated from the US authorities and culminated in the US government’s decision to

discontinue financial support to the ERP in 1991, and the clear association between its

resumption and conducting free and fair elections (“US Eases Debt but Ties Aid to Free Poll”,

Stabroek News, October 1, 1991)7. The British and Canadian governments followed suit, tying

potential aid to the holding of free and fair elections.

It is important to note that explicit support from major Western donor, in particular the

US, did not occur until there was explicit statements from the political opposition, in particular

Cheddi Jagan, indicating that he had moved away from his radical leftist, anti-capitalist stance

and had accepted the principle of laissez-faire in economic affairs. Dr. Jagan’s courting of the

West was remarked upon by the PNC in their Stabroek News column on February 10, 1991

entitled “Machiavellian Politics or Desperation?” The PNC noted that Dr. Jagan was focusing

most of his energies for a local electoral campaign in the US and the Caribbean and had even

hired a high profile law firm to remake his image abroad.

Dr. Jagan confirmed the modification of his political position in a 1991 interview with

Mr. Oliver Clarke, Chairman of the Jamaica Gleaner newspaper. Jagan, commenting on his

party’s future relationship with the United States reported “I have told the people in Washington

that we want the closest relationship with the US”. When questioned about the economic

18

programme he might implement if successful at the polls, he stated that at this period in Guyana’s

history, “socialist programmes…are out of the question” (“We Want Closest Relations with the

USA – Jagan”. Stabroek News, Thursday May 16, 1991, 7. Reprinted Interview).

The pace of Guyana’s political transformation slowed dramatically after 1992 with the

political landscape characterised by chaos and strife. A decade after the reintroduction of electoral

democracy, virtually the same complaints continue to be expressed about the functioning of the

political, institutional and technical dimensions of governance. Criticisms, emanating from

various quarters (in particular the leading opposition party the PNC) persist. The latter has made

many allegations about the absence of good and effective governance during the People’s

Progressive Party/Civic three administrations. Elections in Guyana continue to be plagued by

conflict and crises. The losing parties in both the 1997 and 2001 elections were dissatisfied with

the manner in which the Elections Commission conducted the elections with the PNC alleging

that the governing party engaged in massive fraud and manipulation. International and local

observers certified that although both elections were marred by discrepancies, they by and large,

reflected the will of the electorate. On the other hand, in 2000, a local court vitiated the 1997

elections after a petition had been filed, citing “massive irregularities”.

Several local groups along with international organisations, in particular the United

States’ National Democratic Institute (NDI) have suggested strategies to the government and have

funded studies designed to advance the processes of devolution and decentralization of

governance. Nonetheless, local government bodies continue to be weak and dependent upon

central government subventions, thus limiting their effectiveness in advancing the democratic

process. Some political players including an Indian rights activist political grouping, Rise

Organise and Rebuild (ROAR) have advocated federalism while others have advocated power

7 See also the Guyana Chronicle’s account “US Quite Confident Elections Will be Free and Fair – Hays”, Guyana Chronicle Tuesday October 1, 1991.

19

sharing. Although the state engaged in a process of constitutional reform in 2000-2001, the

interpretation of democracy continues to be limited to elections-related processes.

20

Conclusion

Debt crisis gripped the Guyanese economy from the late 1970s and intensified in the

1980s. From the late 1980s, extensive economic adjustments were embarked upon in the attempt

to address the crisis. These economic adjustments were accompanied by a transformation in the

sphere of governance during the late 1980s and early 1990s. A number of capitalist institutions and

states collaborated to facilitate this transformation. Two key international institutions, the IMF and

World Bank and their structural adjustment prescriptions led this collaborative effort. On a world-

system level, political and economic transformation in Guyana had the consequence of deepening the

incorporation of the local economy into the world economy. The Guyanese political leaders – both

government and opposition – have stated their commitment to liberal capitalist economic policies

and have moved decisively away from nationalist toward export oriented development strategies.

This period when Guyana was implementing structural adjustment programmes coincided with the

increasing emergence of political democracy when individuals were increasingly allowed civil and

political liberties, private property was greatly respected and protected, the economy was opened to

private -often foreign – investment and competitive multi party elections were held. Meanwhile, the

consequence locally was inconsistent with the stated aim of SAPs. In other words, a stable and

structurally sound economy had not been realised, although foreign capitalists were operating

practically unimpeded in the local economy.

The Guyanese state had been remodelled, under the guidance of the IFIs, to one in which the

political directorate was prepared to allow international and local capital to operate unhindered, while

at the same time, strong enough to withstand social repercussions and upheavals emanating from

adjustment.

21

REFERENCES

Books and Journal Articles

Boughton, J., and K. Sarwan Lateef, eds. 1995. Fifty Years after Bretton Woods. The Future of the IMF and the World Bank. Washington D.C.: IMF/ World Bank Group.

Caribbean Insight 13:3-5. Cohen, Joshua. 1989. Deliberation and Democratic Legitimacy. In The Good Policy: Normative Analysis of the State, edited by Alan Hamlin and Philip Pettit. Oxford: Basil Blackwell.

Edwards, S. 1995. The Evolving Role of the World Bank. The Latin American Debt Crisis. Washington: The World Bank.

Ferguson, Tyrone. 1995. Structural Adjustment and Good Governance: The Case of Guyana. Georgetown: Guyana National Printers Ltd. _____. 1999. To Survive Sensibly or to Court Heroic Death: Management of the Guyana Political Economy 1965-1985. Georgetown: Public Affairs Consulting Enterprise.

Friedman, I. S. 1987. The IMF: A Founder's Evaluation. In The Political Morality of the International Monetary Fund. Ethics & Foreign Policy, edited by Robert Myers. New Brunswick: Transaction Books.

Garritsen de Vries, Margaret. 1987. Balance of Payments Adjustment 1945 - 1986. The IMF Experience. Washington D.C.: IMF.

Glover, D. 1991. A Layman’s Guide to Structural Adjustment. Canadian Journal of Development Studies 7: 173-185. ul-Haq, Mahbub. 1995. Reflections on Human Development. New York: Oxford University Press.

Harrigan, Jane. 1991. Guyana. In Aid and Power: The World Bank and Policy Based Lending Volume 2, edited by Paul Mosley, Jane Harrigan and John Toye. London: Routledge. Huntington, Samuel. 1991. Democracy’s Third Wave. Journal of Democracy 2: 26- 39.

International Monetary Fund (IMF). 1988. Ten Common Misconceptions about the IMF. Washington D.C.: IMF

_____. 1990. IMF Annual Report. New York: Oxford University Press. Jayarajah, Carl, and William Branson. 1995. Structural and Sectoral Adjustment. World Bank Experience 1980 - 1992. Washington: The World Bank.

Joseph, R. 1997. Democratization in Africa after 1989: Comparative and Theoretical Perspectives. Comparative Politics 29: 363-382.

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Lindenberg, M., and S. Devarajan. 1993. Prescribing Strong Economic Medicine. Revisiting the Myths about Structural Adjustment, Democracy and Economic Performance in Developing Countries. Comparative Politics 25: 169-182.

Moore, M. 1993a. Good Government? IDS Bulletin 24: 1-6.

_____. 1993b. Declining to Learn from the East? The World Bank on ‘Governance and Development’. IDS Bulletin 24: 39-50.

Nef, Jorge. 1993. Debt, Debt Management and Democracy. Paper presented at Conference, The Latin American Debt Crisis and its Aftermath, ‘Is There Life After Debt?’ University Of Western Ontario, Ontario, Canada.

Nurse, Keith. 1992. The Developmental Role of Export Oriented Industrialization in the New International Division of Labour: The Case of CARICOM Countries. Ph.D. diss., University of the West Indies.

_____. 1997. Debt, Structural Adjustment and the Caribbean Development Challenge. Paper presented at seminar, Structural Adjustment, 25-21 October in Curacao.

Rapley, John. 1996. Understanding Development. Theory and Practice in the Third World. Colorado: Lynne Reinner Publishers.

Swedberg, R. 1986. The Doctrine of Economic Neutrality of the IMF and the World Bank. Journal of Peace Research 23: 377-390.

Thomas, Clive. 1982. Guyana: The IMF/World Bank Group and the General Crisis. Social and Economic Studies 31:4. Wallerstein, Immanuel, and Terrence Hopkins. 1987. Capitalism and the Incorporation of New Zones into the World Economy. Review 10: 763-780.

_____. 1984a. Household Structures and Labour Force Formation in the Capitalist World Economy. In Households and the World Economy, edited by Terrence Hopkins and Immanuel Wallerstein. California: Sage.

_____. 1984b. Long Waves as a Capitalist Process. Review 7: 559-575.

World Bank. 1983. World Development Report. New York: Oxford University Press.

_____. 1992a. Adjustment Lending and Mobilization of Private and Public Resources for Growth. Washington D.C.: World Bank.

_____. 1992b. Global Economic Prospects and the Developing Countries. Washington D.C.: World Bank.

_____. 1992c. Governance and Development. Washington D.C.: World Bank.

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Reports and Speeches

Burnham, Forbes. 1970a. Planning for a New Era. Address by L.F.S. Burnham at 13th Annual Congress of the PNC. Queen’s College, April 2-8, 1970. _____. 1970b. Towards Progress and Change: A Philosophy of Self-Reliance. Extracts from Speech by Prime Minister Forbes Burnham in the National Assembly in 1971 Budget Debate, December 14, 1970. _____. 1974. Declaration of Sophia. Address by the Leader of the People’s National Congress Prime Minister Forbes Burnham at a Special Congress to Mark the 10th Anniversary of the PNC in Government on 14 December 1974. Georgetown: Guyana Printers Ltd. Greenidge, Carl. 1990. Negotiating Structural Adjustment Programmes: The Formulation of a Policy Framework Paper. A Paper Prepared for a Seminar on Negotiating Structural Adjustment Programmes with the World Bank. London 10-11 May 1990.

Guyana Human Rights Association 1990 Annual Report. Guyana National Development Strategy. 1996. USAID. 1998. Guyana. Results Packages. S.O.2: Democracy and Governance. US State Department. 1987. Country Report on Guyana Human Rights Practices 1986. February 19, 1987. World Bank. 1992d. From Economic Recovery to Sustained Growth. Report No. 10307-GUY. April 10, 1992. Washington D.C.: World Bank. _____. 1993a. Guyana: Public Administration Project. Report No. 11258-GUA. March 9, 1993. Washington D.C.: World Bank. _____. 1993b. Guyana: Private Sector Development. Report No. 11705-GUA, June 14, 1993. Washington D.C.: World Bank. _____. 1993c. Guyana: Public Sector Review Vol. 2. Report No. 11753-GUA May 17, 1993. Washington D.C.: World Bank.

Newspaper Sources

“Double Standard”. Stabroek News November 11, 1989. “Carter Center Sending Mission to Monitor Registration”. Stabroek News February 4 1991. PNC Column: “Machiavellian Politics or Desperation?” Stabroek News February 10, 1991. “PPP, WPA Ask Carter to Intervene”. Stabroek News February 12, 1991.

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“New Ministries designed to Avoid Overlapping, Fragmentation”. Stabroek News February 14, 1991. “Government Proceeding With Divestment of State Businesses.” Stabroek News February 24, 1991 “We Want Closest Relations with the USA – Jagan”. Stabroek News, May 16, 1991. “Auditor General to File Reports With National Assembly”. Stabroek News, June 11, 1991. “British High Commission Enhances Appeal Court Library”. Stabroek News June 19, 1991. “Judicial Salaries”. Stabroek News July 2, 1991. “His Finest Hour.” Stabroek News Editorial July 30, 1991. “President Announces Major Concessions for the Private Sector”. Stabroek News, August 27, 1991. “US Eases Debt but Ties Aid to Free Poll”. Stabroek News, October 1, 1991 “US Quite Confident Elections Will be Free and Fair – Hays”. Guyana Chronicle October 1, 1991. “USAID Contributes Further $300 000 [US] to ERP”. Guyana Chronicle October 2, 1991.