NY Times, November 5, 2003 LETTER FROM THE AMERICAS Grievances That Can Bring Globalization to Grief By LARRY ROHTER
LA PAZ, Bolivia — A natural resource coveted on the international market was sitting in the ground, and the Bolivian government wanted to exploit it with the help of foreign capital. But after widespread public protests over the terms of the deal, the president was forced to drop it.
A confrontation over Bolivia's vast natural gas deposits led to the resignation here of President Gonzalo Sánchez de Lozada on Oct. 17, barely a year into his second term in office. But the same sequence of events also describes what happened a decade ago to a plan to enrich the coffers of a desperately poor government by mining the country's ample reserves of lithium, a metallic element used in various alloys, ceramics and even thermonuclear weapons.
In Bolivia, history tends to repeat itself, as governments come and go in dizzying succession. Yet many of those who helped kill the earlier project now say they wish they had acted differently.
"We are in a deep and prolonged economic crisis, and we recognize that we would be in a different stage of development if the lithium plan had gone through," said Mario Rengifo, president of the Potosí Civic Committee, a community group that campaigned against the proposal. "If we ever get another opportunity, we will welcome it with open arms."
The lithium plan fell victim to the same social divisions that have just scuttled the gas export proposal, and exposed what is fast becoming the Achilles' heel of globalization, in parts of Latin America at least. Though political authority may have finally been democratized here after the end of military rule 20 years ago, economic power remains in the hands of a small Europeanized elite that the impoverished Indian majority does not trust.
"Part of the democratic process is assuring that people are going to get a piece of the cake, and that has been lacking in Bolivia," said Marta Lagos, a pollster and political analyst from Chile whose firm, Latinobarimetro, has done opinion surveys here. "Bolivians are suspicious of whoever is making the deal because they think, 'The elite always puts money in its own pockets, and we are left on the streets with nothing to eat.' "
The 1992 lithium dispute is a case in point. Opposition to the project was focused in Potosí, which has valid historical reasons for its suspicion of outsiders who want to exploit its resources. Known as the "treasure house of the Spanish Empire," because it had the richest silver mine in the world in colonial times, Potosí was also the center of Bolivia's tin industry until prices on the world market collapsed in the 1980's, state-owned mines were closed and thousands of miners lost their jobs.
But Mr. Sánchez de Lozada himself helped lead the campaign against the deal. A millionaire executive with extensive mining holdings, he was reportedly frustrated at having been had been left out of the project. So in the months before an election that he would eventually win, he capitalized on nationalist sentiment and helped scuttle the plan.
"A lot of petty politicking went on, and he was right in the middle of it," said Álvaro Rejas, who was minister of mines and energy at the time. "By the time they were finished interfering, it was like trying to resuscitate the dead, and the whole country had lost an opportunity to create the nucleus of a basic chemical industry."
As Mr. Rejas, now a mining consultant, recalled it, the lithium project would have resulted in improved roads and railways and the installation of electricity in an area known as Salar de Uyumi, where even now they hardly exist. It would also have offered the opportunity to process and export additional substances like borax, magnesium, potassium and other components of fertilizer for a hungry market next door in Brazil.
Over all, the project would have required the winning bidder, an American company called Lithco, to invest $100 million in the region. The contract also called for royalties of up to $43 million a year over 40 years, with the bulk going to Potosí and the remainder to the federal treasury. In the end, the project went to Argentina, which also has large deposits of lithium and was asking less in the way of concessions and royalties.
As a result, contemporary Potosí, whose capital city of the same name was in its heyday as big and wealthy as London, remains the poorest of the nine provinces of Bolivia, which in turn is the poorest country in all of South America. With jobs still especially scarce there, emigration from the region to neighboring Argentina and Chile, more prosperous countries that have embraced foreign investment, has accelerated over the last decade.
Until the mines of Potosí ceased to be sufficiently profitable and the government pulled out, its tin provided the Bolivian government with most of its revenues. At that time, the people of Potosí wanted political autonomy, which would have given them more control over the income from tin and how it was spent, but the country's poorer provinces objected.
Today, it is provinces like Tarija, where more than 80 percent of the natural gas deposits are located, and Santa Cruz, enjoying a soybean export boom, that are demanding autonomy. On Oct. 21, thousands of people marched in Tarija to oppose the new government's promise of a nationwide referendum on the gas export plan, which is expected to result in a negative vote. But to people like Mr. Rengifo, the Potosí community leader, the shouts have a hollow ring. "The paradox of our situation is that we have gone from being the richest to the poorest," he said.
"We want the natives of Potosí to be able to return home from abroad and from other parts of the country. But that can't happen without making Potosí prosperous and productive, and to get that growth we need the kind of investment and technology that aren't available in Bolivia and can only come from abroad."
--
The Marxism list: www.marxmail.org
