Cristobal forwarded the following (from the FT?):
Morales lines up land owners as next target
>Published: May 11 2006 22:23 |
>>Evo Morales, the Bolivian president, on Thursday ruled out compensating
foreign energy companies that face changes to their contracts as a result
of a
controversial nationalisation policy announced earlier this month.
................
FWIW, last week I posted the following in response to a question on another
list (apologies for cross posting). I don't see much that has changed: at
this point the public/politician statements are posturing in a high stakes
poker hand. Admittedly, I think it would be a great failure of negotiating
skills if an agreement is not reached.
But it may be less sure that Morales will get enough cash flow (as distinct
from purchased ownership with resulting debt payments) to finance the rest
of what he needs to do quickly in other sectors. It is telling that even
while in Europe Morales felt obliged to reassure his public that he will be
moving soon on the land reform issue. And then there is the minimum wage,
the mining companies, etc.
Paul
1. Overview:
It is still very early in a conflict that may last quite a while. The
confrontation has conflicts at several levels:
- consumer interests vs petroleum company interests vs "national
development" interests;
- conflicts in the new international pecking order (Bolivia
underneath Brazil, underneath Europe, underneath the US);
- complicated domestic political conflicts (within Bolivia,
Brazil, Spain, etc) that are rooted in class, ethnic and regional issues.
Although each case is unique I think LBOers may find it interesting to see
in the Bolivia case examples that illustrate the new political terrain
that is emerging under neo-liberalism. There may be insights to alliances
and weaknesses that will relevant to many other international struggles.
2. Lulu (Doug's question):
Even IF the path of negotiation is eventually chosen (we won't really know
for months) then assessing the outcome, and Lulu's role, will depend on
looking closely at the final details. Right now we are seeing only the
symbolic political statements and a few opening ploys in the negotiations.
One expects Lulu to start off by sounding "reasonable" in the
headlines -- at this point he should hope to find a negotiated solution
(one that limits the pain to Brazil's consumers even if Petrobras
Brazil's assets\profits are somewhat hurt). He can then show that his
liberal "smart" and "understanding" approach works better than the
heavy-handed tactics that his domestic opposition would have used in the
first instance. BUT, Lulu has already shown a few "sticks": below the
headlines he also said he would defend the existing contract and that
"Brazil has rights too" (see below for what this alludes to). IMO, one
can not yet say where Lula will ultimately position himself in the
triangle between Bolivia, Brazilian consumers and Petrobras.
3. Evo Morales has 3 categories of goals. They affect the key foreign
players in different ways and they strengthen him domestically with
different groups over different time frames.
a. Brazil and Argentina's companies pay Bolivia a fraction of the
price that U.S. and European companies pay for gas. The difference is
split between foreign consumers (companies and individuals in Brazil and
Argentina) and the foreign petroleum companies (mostly from Brazil, Spain
and France). The privatization of the mid 1990's gave Bolivia only 18% of
the revenue from the large gas fields (!!). Last year, under pressure
from the street, the previous government raised the percentage in a
complex formula that they claim amounted to 50%. It is not clear if and
how this was implemented. Morales is demanding an 82% share.
But even with an increase there will not be huge amounts for national
development - even adjusted for Bolivia's much smaller population the gas
brings in perhaps a quarter of Venezuela's oil. Still, simply raising
the retention share (which was fixed by the basic contract) would give
Morales both a political victory and provide significant financing for a
public expenditure program that could help him reach out beyond his
relatively narrow base. He may need to do this quickly.
[MAS' core is among Aymara speakers and the coco growers in the Chapare
district of Chabamba Province and even his supporters did not expect the
outright victory in December. The opposition controls the Senate
chamber, 6 of 9 regional Departments, all the mainstream media, much of
the economy, much of the judiciary, etc. The movement is relatively
untested in government and has important internal divisions (political
and social). Morales recently greatly scaled back plans to increase the
minimum wage, has postponed land reform measures and is receiving more
pressure and criticism from the central unions, the miners and the left.]
b. But for Morales' political base re-gaining ownership of the gas
may be an even more cherished political goal. His movement emerges from
the "Gas Wars" and reversing the heavily contested privatization of the
gas was one of two key campaign promises (major constitutional reform was
the other and will be even more contested by the opposition). The
Presidential decree says that 51% ownership will have to be sold to the
state owned gas company YPFB (the source of financing is not clear).
But taking back ownership may put Morales in even greater conflict with
the foreign petroleum companies and their international supporters than
the price rise. And the financial benefit for Bolivia is only long term -
in fact payments to the foreign companies may even be a large short term
financial drain. In addition, the previous neo-liberal governments
dismantled the national gas company to nearly a paper shell so that the
management capacity must now be created from scratch in a country that has
limited human resources.
c. A third goal for Morales is to expand Bolivia's capacity to
process hydrocarbon's. A processing plant for ethane, methalene and
propane is high on his list and Chavez has offered some financing (the
amount was not stated and nothing is definite). Chavez also has his own
pet project that may compete with Bolivia: a long pipeline to distribute
Venezuelan gas to Brazil and Argentina and he has sought ways to make this
amenable to Paraguay and Bolivia with feeder lines and hints of
concessionary prices.
Gas processing plants would be a valuable "sweetener" for Morales
which might permit him to give up a bit more on the price and ownership
issues. This helps gives Chavez a place at the table in the discussions
with Brazil and Argentina (see also below).
4. Forces outside Bolivia
Morales confronts two separate but overlapping categories of immediate
external opposition to his move. The price rise affects consumers and
hence the governments of Brazil and Argentina (can the petroleum companies
pass on all the increase or do they also face some loss in profits?). On
the other hand, the forced sale of assets may not affect consumers - just
the foreign petroleum companies. U.S. companies are largely not directly
involved; 80% of the gas fields are owned by 3 companies: Petrobras
(Brazil), Repsol (Spain) and Total (France). BG and BP (UK) are also present.
a) Initial *postures* have ranged from Petrobras (confrontational) to
the Brazilian and Spanish governments (calling for negotiations but also
threatening). The contracts call for the settlement of disputes in the
courts...in New York (!). For example:
"Earlier, Finance Minister Guido Mantega [of Brazil] told the Estado news
agency that Brazil could seek arbitration in a New York court in the event
of "exorbitant price hikes" for Bolivian natural gas."
http://www.businessweek.com/ap/financialnews/D8HCGL1GD.htm?campaign_id=apn_home_down&chan=db
b) There is also the possibility of disputation in the Bolivian
courts. Morales, lacking control of the Senate, issued these measures
through Presidential decree rather than by Parliamentary law.
c) One dog (really a pack?) has not barked - at least yet. The World
Bank has said nothing (contrast this with its tough activist role in
Ecuador) and the U.S. has been restrained. Clearly, the nationality of the
foreign companies permits the Bush administration and Wolfowitz to play
their hand more slowly (and perhaps appreciate the possibility of Lulu,
Chirac and Zapatero asking them to play a tough international role).
d) The IMF has also not spoken and its situation may illustrate the
cross current of interests that must be sorted out in the coming
weeks. The head of the IMF is Spain's former finance minister from the
conservative party and that party refused to even meet with Morales when
he visited Madrid.
But the head of the IMF is also a close friend of the *former*
head of Repsol who was ousted and is being blamed by the current
leadership for serious problems (the current leadership was installed by
Catalan banking interests regionalist interests who are not friends of
the conservative party). The Spanish company Repsol (created from the
merger and privatization of Spain's and Argentina's national oil
companies) has a big stake in this dispute and an even bigger stake in a
dispute with Argentina. Blaming these disputes, Repsol has reversed its
estimates of its "proven reserves" which has triggered an SEC
investigation (2 years ago Shell did this, leading to scandal and crisis).
e) Chavez' role is strategic and worth noting. In previous cases
(such as Ecuador recently), the IMF/WB/Commercial Banks could readily
trigger financial crises (citing violation of "conditionality" clauses in
loan agreements) thus forcing weak governments to collapse at no risk to
themselves. The apparent willingness of Chavez to back Morales limits
that threat.
Paul
