Development & Aid, Economy & Trade, Headlines, Latin America & the Caribbean

BOLIVIA: President-Elect Between a Rock and a Hard Place

Franz Chávez

LA PAZ, Jan 11 2006 (IPS) - With less than two weeks to go before he takes office as Bolivia’s first indigenous president, Evo Morales is already facing the dilemma of how to satisfy voters wooed by his talk of nationalising the country’s natural gas resources while calming investors with a more flexible policy on foreign capital.

Now it is a question of dealing with concrete interests, as demonstrated by the president-elect – the former leader of Bolivia’s coca farmers and the head of the Movement Towards Socialism (MAS) party – on a hasty tour that has taken him to Cuba, Venezuela, Spain, the Netherlands, Belgium, France, China and South Africa, and will end with visits to Brazil and Argentina.

Governments in Europe are concerned about investments by European oil companies in Bolivia, a subject that came up in Morales’s meetings with Spain’s Socialist Prime Minister José Luis Rodríguez Zapatero, who spoke on behalf of the Spanish-Argentine oil company Repsol-YPF; the European Union’s foreign policy chief Javier Solana, who is looking out for the future of the bloc’s private investments, like those of British Petroleum; and Dutch Foreign Minister Bernard Bot, who expressed concerns about Shell.

Foreign oil companies say they have invested some 3.5 billion dollars in Bolivia since 1996, when the country began to privatise the production of natural gas through a gradual transfer of state property to private investors.

The government of Carlos Mesa (October 2003-June 2005) refused to nationalise the natural gas concessions to foreign companies, as demanded by the popular movement that brought down his predecessor, Gonzalo Sánchez de Lozada.

Mesa pointed out that nationalisation would cost the country eight billion dollars in compensation – equivalent to the country’s entire gross domestic product (GDP).

Small wonder that Morales, who will be sworn in on Jan. 22, is already being given VIP treatment and receptions usually reserved for presidents in office.

Morales’s unexpected first-round victory on Dec. 18, in which he took 53.4 percent of the vote, shook countries with economic interests in Bolivia, which quickly began to make efforts to find out how closely he would stick to his leftist, indigenous rights campaign platform, in which nationalisation figured largely.

The first two visits he made, to presidents Fidel Castro of Cuba and Hugo Chávez of Venezuela, gave a clear indication that the president-elect of South America’s poorest country planned to join the current in the region that is loudly opposed to U.S. foreign policy.

The U.S. ambassador in La Paz, David Greenlee, moved swiftly to meet with Morales before the president-elect set out on his tour, marking a drastic shift from the distance the U.S. Embassy previously maintained from the indigenous leader, who was denied a visa to visit the United States on at least one occasion.

Meanwhile, in his meetings with European leaders, Morales toned down his radical campaign rhetoric and repeated messages aimed at calming fears awakened by the talk of nationalisation.

“We will not confiscate or expropriate or expel companies,” but “we have every historical and moral right to exercise our property rights over (the country’s) natural resources,” Morales told journalists on his tour.

In La Paz, however, many of the voices that backed Morales in the election campaign are now demanding that he live up to his main promise – to nationalise the country’s abundant natural gas.

The natural gas question was at the roots of the protests and unrest that led to the downfall of presidents Sánchez de Lozada in October 2003 and Mesa in June 2005.

Jaime Solares, the executive secretary of Bolivia’s Central Obrera Boliviana central trade union federation, told IPS that Morales must fulfill his pledge to implement a policy of “intelligent nationalisation”, under MAS’s proposal of “Andean capitalism”.

Refusal to carry out the “confiscation and military occupation” of Bolivia’s natural gas fields would basically amount to betrayal of the sectors that backed Morales in the elections on that condition, above and beyond the problem of compensation payments to the foreign oil companies, said the trade unionist.

Sánchez de Lozada fled the country in October 2003 after 67 demonstrators were killed when the army was called out to squash the protests dubbed the “gas war”. He was replaced by Mesa, his vice-president.

As a result of the month-long popular uprising, a referendum was held in which Bolivians voted to increase the royalties paid by foreign oil companies, from 18 to 50 percent.

Mesa, however, failed to obtain the necessary political support in Congress to enforce the new law on natural gas resources that arose from the referendum, and a new wave of demonstrations broke out, calling for the nationalisation of the country’s natural gas – a demand that MAS made part of its campaign platform.

But on his tour as president-elect, Morales underlined his respect for private investment, while warning that the full weight of the law would be brought to bear on companies found to be smuggling natural gas, without paying taxes or honouring their contracts.

On his return to South America, Morales will visit leftist President Luiz Inácio Lula da Silva in Brazil on Jan. 15 and Argentina’s left-leaning leader, President Néstor Kirchner, two days later.

While Morales and Lula are ideologically aligned, Brazil’s state-run oil company, Petrobras, is heavily involved in Bolivia, where it controls gas fields, refineries and pipelines, and exports natural gas to the Brazilian market.

In Buenos Aires, the Bolivian president-elect will ask Kirchner to reconsider the discount or “solidarity” prices that Argentina is paying for Bolivia’s natural gas, which had been agreed with Mesa when Argentina found itself in the midst of an energy crisis.

Argentina is paying Bolivia an average price of 3.18 dollars per BTU (British Thermal Unit), far below the roughly 11 dollars per BTU paid in the United States, Mexico and Europe.

Bolivian vice president-elect Alvaro García told the Argentine press that he hoped an agreement would be reached to modify the low prices currently paid by Argentina.

Argentina is also one of the countries that has invested in natural gas in southern Bolivia, through the private oil company YPF’s association with Spain’s Repsol.

Morales’s visit to China, meanwhile, was interpreted by analysts as a bid by the president-elect to make headway in a market that is voracious for commodities like soybeans and minerals, in exchange for opening the door to Chinese investment in Bolivia’s energy sector.

Groups of Chinese investors have visited Bolivia in the past few months to make (so far unsuccessful) efforts to invest in this country’s natural gas industry.

Bolivia has the second-largest natural gas reserves in South America – an estimated 53 trillion cubic feet – after Venezuela.

At the same time, Morales has received offers of aid, such as a promise by Spain to forgive the bulk of the 120 million dollar debt owed by Bolivia and to provide a 22 million dollar donation for health programmes, which will provide relief for Bolivia’s impoverished economy.