The Miami Herald
November 23, 1998

Investors on sidelines during dispute on
year-old presidency of Janet Jagan

             LARRY LUXNER
             Special to The Herald

             GEORGETOWN, Guyana -- Nearly a year after Janet Jagan became president in
             a hotly disputed election, political divisions continue to wrack the country,
             paralyzing the once-robust economy and keeping investors at bay.

             The sometimes violent street protests that resulted after Jagan defeated former
             President Desmond Hoyte on Dec. 15, 1997, have abated. But the electoral
             standoff between Jagan, whose leftist People's Progressive Party (PPP) is
             supported largely by Guyana's East Indian majority, and Hoyte, of the People's
             National Congress (PNC), drags on.

             ``I don't believe there's a genuine belief the elections were rigged,'' said Jagan, 78,
             the widow of the late President Cheddi Jagan. ``I think it's part of a new
             phenomenon developing where opposition parties refuse to accept the results of an
             election because it doesn't suit their agenda.''

             Hoyte, 69, whose PNC is backed mainly by the country's black minority, accuses
             Jagan of pushing racist policies against blacks. He says blacks charged with
             squatting on state land have their homes destroyed, while East Indians who do the
             same are left alone.

             As the confrontation continues, the Guyanese economy is shrinking, and investors
             take a wait-and-see attitude.

             ``Guyana's major problem is the need for new investment,'' said Shridath Ramphal,
             a former Guyanese foreign minister who is now chief trade negotiator for the
             15-member Caribbean Community (CARICOM). ``That seems to have been put
             on hold as investors gauge the political environment.''

             Expansion interrupted

             From 1991 until a few months ago, Guyana's economy was expanding at the
             astounding rate of 7 percent a year -- earning praise from the World Bank, the
             International Monetary Fund, the Inter-American Development Bank and regional
             experts. But suddenly, with fallout from Asia's financial crisis reaching Caribbean
             shores, the nation's prosperity is in doubt.

             The timber industry alone will likely suffer a 35 percent drop this year, following
             economic difficulties in Indonesia, Malaysia and other Asian countries that have
             invested heavily in this sector.

             In addition, Guyana's gold, bauxite and sugar industries also are in crisis because
             of the scarcity of foreign exchange; only rice exports are expected to improve this

             ``The real problem is not so much the political infighting, but the decline in
             commodity prices,'' said Ronald Webster, president of the Guyana Manufacturers
             Association. ``Guyana is 90 percent dependent on sugar, rice, bauxite, gold and
             timber. In every single instance, prices have dropped dramatically. Coupled with
             that, we had El Niño toward the last half of 1997.''

             ``In my opinion, the PPP is a socialist party, and they really have no interest in
             private investment,'' said Cornelius B. Prior Jr., chief executive officer of Atlantic
             Tele-Network. ``Under Hoyte, the tax rate was 35 percent. Jagan raised that to
             45 percent. What signal does that send to the American investor?''

             Mediation under way

             Meanwhile, CARICOM, which is headquartered in Guyana, appointed a special
             mediator to iron out lingering differences between the warring parties. For two
             months, the former attorney general of Barbados, Maurice King, has been meeting
             with Jagan and Hoyte in a bid to prevent a repeat of the violence that broke out in
             December, following the election.

             But the PNC is unhappy with the slow pace at which the talks are proceeding.

             ``We have made virtually no progress with the dialogue,'' Hoyte said. ``. . . Our
             own view is that the PPP has not entered the process in good faith.''

             Jagan, who is white and Chicago-born, says her background hasn't made much of
             a dent in her popularity.

             ``The only personal hostility I get is from diehard PNC members,'' she said.
             ``Most people don't look at me as a white woman. They look at me as a woman
             who's been on the political scene for many years, and who is the widow of Cheddi