Economy & Trade, Headlines, Latin America & the Caribbean

ENERGY-BOLIVIA: Voters Back Changes to Natural Gas Policy

Franz Chávez

LA PAZ, Jul 19 2004 (IPS) - A majority in Bolivia voted in favour of the proposed changes to the government’s natural gas policy, according to the preliminary results of Sunday’s referendum, which means the state oil company will regain control over the country’s energy resources and the 78 contracts with foreign oil firms may be renegotiated.

Despite threats from radical indigenous activists of a boycott and burning of ballot boxes, the referendum took place amidst calm. The results are binding because the necessary 50 percent of voters turned out.

President Carlos Mesa announced that exports of natural gas to Chile, and to the United States and Mexico through a Chilean port, would depend on a solution to land-locked Bolivia’s longstanding demand for an outlet to the sea.

The question of whether to use Bolivia’s abundant natural gas reserves as a bargaining chip in negotiations with Chile over sovereign access to the Pacific Ocean won 58 percent support from voters, and Mesa said his government is working on a broad agenda, which will exclude no issue, for talks with the Chilean government of Ricardo Lagos.

Bolivia lost its coastline to Chile in the War of the Pacific (1879-1884).

The president also said the new hydrocarbons law that will be based on the outcome of the referendum will restore the Bolivian state’s ownership of the country’s energy resources, enable the government to charge foreign oil companies higher royalties, strengthen the state oil company, and allow exports of natural gas, after domestic demand has been met.

He underlined that 60 percent of the nearly 4.5 million voters came out on Sunday, which he said was an unusually high turnout for a referendum in Latin America.

The government and other political and social actors were pleased that threats of destroying ballot boxes in the highland areas of western Bolivia and of a boycott in the slum city of El Alto, next to La Paz, did not keep voters from participating in Sunday’s poll.

Only one incident was reported: the head of the Organisation of American States (OAS) observer mission, Moisés Benamor, was hit with a stone when he tried to visit a voting station in El Alto, although he was not injured.

The stone-throwing incident involved Bolivians opposed to the presence of international observers in Senkata, an area in El Alto that was at the centre of the protests that forced the resignation of president Gonzalo Sánchez de Lozada, who was replaced by Mesa, his vice-president, in October 2003.

Analysts pointed out that it is now up to Congress to translate voters’ support for the government’s proposed changes to natural gas policy into a new law on hydrocarbons.

But analyst Carlos Villegas with the Centre for Labour and Agrarian Development told IPS that he was pessimistic regarding the future of the process of modifying energy policy.

”The referendum will not resolve the big problems, and on the contrary, Congress will be caught up in debating the various possible interpretations of each one of the referendum’s five questions,” he said.

But in a message aimed at the country’s political parties, Mesa said ”parliament must understand that its vote has to be faithful to the spirit, letter and form of the five questions.”

Minister of Hydrocarbons Guillermo Tórrez said the government will ask the oil companies to renegotiate the contracts signed under the first Sánchez de Lozada administration (1993-1997).

However, both Mesa and Tórrez ruled out the possibility of expropriating the assets of the transnational corporations exploiting Bolivia’s gas fields, which would demand five billion dollars in compensation.

As part of a partial privatisation process described as ”capitalisation”, control over the country’s gas and oil fields was transferred to several foreign companies under Sánchez de Lozada’s first administration, including Brazil’s Petrobras, Spain’s Total and British Gas.

Foreign companies now have control over Bolivia’s 54 trillion cubic feet of gas – the second-largest reserves in South America after Venezuela.

Besides providing a strong show of political support for Mesa, Sunday’s referendum gave the green light to exports of natural gas. That was applauded by the business community, which sees gas sales as a mechanism of growth in foreign trade.

”Democracy has been strengthened, and now the president has no excuse not to export natural gas,” said Roberto Mustafá, the head of Bolivia’s leading private business association.

The month-long social uprising last September and October was sparked by protests against exporting natural gas to the United States and Mexico through a Chilean port.

The brutal police and military crackdown, which Mesa opposed, left at least 70 demonstrators dead, according to human rights groups.

The president of the Eastern Agricultural Chamber (CAO), Zvonko Matkovic, said support for continued exports of natural gas will help generate greater revenues for the Bolivian state.

Matkovic has been one of the loudest critics of the Aymara indigenous activists who led last October’s popular uprising, and has called on several occasions for vigorous action to put down social protests in the western part of the country, where La Paz is located.

Analyst Jorge Lazarte agreed that the referendum gave Mesa the strength he needed to remain in office, but warned that the parliament would now become a new scenario of heated debate and conflict over the new law on hydrocarbons.

Parliamentary Deputy Felipe Quispe with the Pachakuti Indigenous Movement (MIP) argued that foreign companies should be expelled from the country in compliance with Sunday’s vote, but admitted that his organisation needed to engage in self-criticism because it failed to block the referendum in the western Andean highlands region where it is based.

In the semi-tropical valleys of the central province of Cochabamba, coca-growers voted ‘Yes’ to the repeal of the current hydrocarbons law, the strengthening of the badly weakened state oil company, and the restoration of state control over natural gas resources.

But they voted ‘No’ to exports and to the use of natural gas as a strategic instrument in eventual negotiations of an outlet to the sea.

That vote was the result of the campaign carried out by the Movement Towards Socialism (MAS) headed by the influential leader of the coca-growers, indigenous parliamentary Deputy Evo Morales.

Minister Tórrez said he was confident that the results of the referendum would help pull Bolivia – the poorest country in South America – out of economic stagnation. According to official statistics, 71 percent of Bolivia’s nearly nine million people live below the poverty line.

During and after the referendum, scant attention was given to to the 60 Guaraní men, women and children demonstrating with banners and signs in a La Paz public square, demanding the revocation of the contract between the state and the Brazilian oil company Petrobras in the gas fields of San Alberto in the southern province of Tarija.

‘Gas Belongs to Bolivians!’ read one of the signs of the Guaraní Indians who took 43 days to walk 1,500 km to the capital in defence of their lands. They complain that Petrobras has stolen their land and polluted their rivers.

But although voters were deciding how best to develop and exploit the country’s natural gas resources, the protesters met with indifference.