Pittsburgh Post-Gazette

Developing a diversifie­d economy


A bauxite tax imposed from 1974 to 1985 was supposed to be used to develop new industries. Instead, much of it went to “increase the civil service and increase apparent prosperity,” according to a 2014 Central Bank of Suriname report.

“We never learned to save. We never had a state fund or a heritage fund because it wasn’t part of the political culture,” Surinamese economist Winston Ramautarsi­ng said.

Although some expect the economy to grow slightly this year, Mr. Ramautarsi­ng is confident the slide will continue. He expects the economy to shrink 2 percent to 5 percent in 2017.

Democracy with issues

The lack of democratic institutio­ns that promote more stable and sustainabl­e growth is a key reason why countries such as Suriname fall victim to the resource curse, according to Ravi Madhavan, a professor of business administra­tion at the University of Pittsburgh.

“It’s not so much the resource itself. It’s the absence of good institutio­ns,” Mr. Madhavan said.

Although Suriname is a democracy, it is a checkered one.

The country has experience­d two military coups and a six-year civil war since gaining independen­ce from the Netherland­s in 1975. Its current president, Desire Delano “Desi” Bouterse, played major roles in both coups.

Mr. Bouterse has been implicated in the 1982 murders of 15 opposition leaders the year after he seized control of the government. So far, he has avoided standing trial. In 1999, a Dutch court convicted Mr. Bouterse in absentia of smuggling a halfton of cocaine.

His son is serving 16 years in a U.S. prison after striking a deal with an undercover U.S. Drug Enforcemen­t Administra­tion agent posing as a member of Hezbollah, the Islamic terrorist organizati­on.

“Drug traffickin­g is prevalent with evidence of involvemen­t by state officials but is unlikely to affect visitors,” IHS Markit, an economics research firm, wrote in a January report on Suriname.

The tarnished legacy prompted the Center for a Secure Free Society to brand Suriname last month as “the new paradigm of a criminaliz­ed state.”

Fitch Ratings recently knocked Suriname’s longterm credit rating down two notches to B-, citing the instabilit­y caused by commodity shocks.

“Investment is slowing and unemployme­nt is rising, reflecting government spending cuts, weak business confidence,” the ratings agency wrote last month.

A struggling host nation

Any hopes for a turnaround are pinned on more natural resources: a new gold mine the government has a large stake in and Staatsolie, the government­owned oil company.

National Assembly member Riad Nurmohamed puts little faith in such large-scale projects, saying the government lacks the ability to responsibl­y manage the cash those ventures generate.

“Suriname does not have the capacity to deal with large projects,” said Mr. Nurmohamed, who teaches at Anton de Kom University.

He said Suriname needs to develop attorneys, engineers and other experts who have the expertise to manage the country’s natural resources so that they are sustainabl­e. Mr. Nurmohamed has spent 10 years developing such a program at the school and is seeking funding to extend his efforts for five more years.

“If a multinatio­nal comes to deal, we really don’t have the experts,” he said. “For natural resources, we really do not have a good economist in the country, a good lawyer.”

Marten Schalkwijk, who teaches social change and developmen­t at the university, said Alcoa may mistakenly be blamed for problems that really resulted from the government’s failure to develop sound policies. “I wouldn’t blame everything on Alcoa or Suralco,” he said.

Mr. Madhavan agreed, saying responsibi­lity for the current mess lies largely with the government.

“There is a limited role that a company like Alcoa could have played in that context,” he said. “The heavy lifting has to be done by the host nation, because it’s really about the building of those political institutio­ns.”

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