All smoke, no fire in Bolivia
William Powers The New York Times
MONDAY, MAY 8, 2006
LA PAZ Out for a stroll here on Monday last week, I stopped in my tracks.
Bolivian soldiers had surrounded my local gas station, where a banner read,
"Property of the Bolivian State." They were among several thousand soldiers
posted at the more than 50 oil fields and refineries around this landlocked
nation, which holds South America's largest natural gas reserves after
Venezuela. The continent's newest populist leader, President Evo Morales, had
just issued a decree nationalizing Bolivia's petroleum.
In reaction to the news, the European Union warned that the move could
tighten global energy supplies and increase prices at the pump. Other
international analysts have expressed concern about a resurgence of dangerous
"energy nationalism." However alarming Bolivia's move might appear on the
surface, though, there is surprisingly little in it to worry the United States
and the West.
This is simply the way democracy sometimes works. Oil and gas
nationalization has been the main political issue in Bolivia for the last
several years. Morales, an Aymara Indian farmer, won a landslide victory in
December on a promise to nationalize the gas industry. Now he's delivering on
that promise he made to Bolivia's nine million citizens.
And when viewed from a Bolivian perspective, this is less of a
nationalization than a return to constitutionality. Morales has a strong legal
argument that the privatization that took place in the mid-1990s was
unconstitutional. Under Bolivia's Constitution, the contracts that gave control
to private companies were supposed to be approved by Congress, and they were
not.
Add this to resentment on the street over Bolivia's low ranking last year
on the Transparency International corruption index - placing its leaders among
the world's most dishonest - and a long history of swindles where natural
resources have been "privatized" into the global economy to the sole benefit of
a few very wealthy Bolivians.
Nor is this a classic nationalization in the sense of the confiscations
that took place in the region in the '50s and '70s. In those days, Latin
American governments expropriated everything and kicked out the companies the
next day. This time Bolivia will exert greater control over the companies,
including significantly higher taxes and 50 percent-plus-one state ownership,
but Morales has pledged to create an environment conducive to private
profit-making, and the government has repeatedly stated that it is a
"nationalization without confiscation," with no expulsion of foreign companies
nor expropriation of their assets.
Then why did Morales send in the army? In a word, politics. His dramatic
televised decree - delivered in a hard hat from a Tarija oil field - was
necessary to placate masses of radicalized Bolivians who demand "confiscation
without compensation." The majority of Bolivians support nationalization out of
acute frustration over two decades of failed "neoliberal" policies by the
International Monetary Fund, which tied sorely needed loans to privatization,
debt reduction and relaxation of labor standards.
Bolivia was one of the first Latin American countries to adopt this
approach back in the mid-1980s. State-owned companies were sold off. Government
spending and regulation was scaled back. Foreign capital was courted. All on
the promise of a new dawn of well-being.
Twenty years later the average Bolivian is worse off than before. Exports
have declined. Incomes are stagnant, and half of the population lives on less
than $2 a day. The rest of Latin America has experienced similar results from
neoliberalism, leading to disillusionment that has given rise to
leftist-populist governments.
Even so, some continue to insist that Bolivia's new nationalization
policy only makes things worse by scaring off future investments. This does not
appear to be true. Although the principal companies invested here - Brazil's
Petrobras, Spain's Repsol and Britain's BG Group - have predictably denounced
the nationalization, they are not about to pull up stakes. The companies won't
see the huge profits they enjoyed under lax Bolivian control and the global
rally in commodities prices, but they will make money.
The principal danger is that Morales could go beyond his mandate and
detour into a more extreme resource nationalism that then spreads among
Bolivia's energy-rich neighbors. But the world can only hasten such an outcome
by trying to punish Morales.
The world, such as it is, needs gas and oil, and Bolivia and its
neighbors need to sell it. Bolivia is just struggling for a way to make markets
work.
William Powers is the author of the forthcoming "Whispering in the
Giant's Ear: A Frontline Chronicle from Bolivia's War on Globalization."
[Non-text portions of this message have been removed]
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