Suriname is poised to attract substantial foreign direct investments in the near future. In 2020, this small South American nation discovered an estimated 10 billion barrels of oil and gas reserves in the Suriname-Guyana Basin. The country is on the verge of experiencing a significant increase in wealth due to these new oil discoveries. At the same time, Suriname is transitioning to democracy. The country just elected a new president, Chan Santokhi, following a landslide victory. His administration succeeds Desi Bouterse, a dictator convicted for drug trafficking and corruption, who mimicked Chinese and Venezuelan anti-imperialist rhetoric and ineffective socialist economic policy.
As the country opens its economy, consolidates its political institutions, and strengthens its business environment, the United States must not let China, which maintains nefarious ambitions of increasing its foothold in South America, serve as the primary economic partner. There is a real opportunity for the United States to strengthen diplomatic and economic ties with a country that has long occupied a space on the back burner of U.S. foreign policy.
Since at least 2006, China has maintained a long economic relationship with Suriname. In 2019, Presidents Xi Jinping and Bouterse announced the China-Suriname strategic cooperation partnership, joining Suriname in the Belt Road Initiative. Beijing is the biggest creditor to Suriname, which has outstanding loans of approximately $2.4 billion as of 2019, $1 billion of that to China. Suriname was one of 53 countries to support the Chinese Hong Kong National Security Law that eroded democratic rights and autonomy promised to Hong Kong in an international treaty signed in 1997.
Chinese engagement could prove corrosive to Suriname’s weak democratic institutions. Former Secretary of State Mike Pompeo warned about the risk of Chinese investment when he met with Santokhi in September 2020: “We’ve watched the Chinese Communist Party invest in countries, and it all seems great at the front end and then it all comes falling down when the political costs connected to that becomes clear.”
Additionally, China’s investments with a poor environmental record could be detrimental to the conservation efforts Suriname has accomplished up to this point. Suriname needs to uphold its conservation efforts — having preserved 93 percent of its original Amazon forest cover — the largest percentage in the world. This preservation allows Suriname to be one of only three countries globally classified as “carbon negative,” meaning they remove more greenhouse gases from the atmosphere than they emit. Suriname’s prioritization of conservation and membership in the Amazonian pact of 1978 led to the creation of the National Biodiversity Action Plan of 2013. This plan has helped Suriname formulate a conservation strategy that has made it one of the most well preserved and biodiverse countries on the globe.
The type of investments the country attracts are especially important since both Suriname and its neighbor Guyana share a basin that has become one of the most coveted offshore drilling locations globally. Major companies have begun operations there as breakeven price for oil hovers between $30 and $40 a barrel. Drilling is only in its infancy, and oil will likely not come online until 2026. Although there are billions of dollars lying in offshore oil and gas reserves, these could easily be mismanaged without proper guidance and know-how. Even a medium-sized oil discovery in Suriname has the potential to massively transform a country of only 600,000 people, especially after the economy contracted by more than 13 percent due to the COVID pandemic. Suriname’s GDP per capita hovers at the world average ($17,000 in 2020), so the new government will have to put together a plan that tackles economic recovery from the pandemic and manages foreign investments in a way that benefits the whole country — not just a few.
In this regard, President Santokhi faces three crucial questions: how much to save for future generations; how to achieve economic stability despite widely fluctuating oil revenues, and how to ensure high quality spending (whether in the form of large investment projects, public consumption, or subsidies). Strong institutions and civil society, a functioning parliament, and a capable government are necessary for Suriname to realize its full economic potential.
As Suriname seeks foreign investments and economic partnerships abroad, the United States can play a crucial role in three areas: economic diversification, environmental preservation, and good governance. The Biden-Harris administration should take advantage of this opening political window to turn the page in our relations with Suriname while curbing China’s aspirations to gain a stronger foothold in South America.
Daniel F. Runde is a senior vice president and William A. Schreyer chair in Global Analysis at the Center for Strategic and International Studies. He previously worked for the U.S. Agency for International Development, the World Bank Group, and in investment banking, with experience in Africa, Asia, Europe, Latin America, and the Middle East.