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BOLIVIA
Morales fulfills campaign promises
Inter Press Service, Latinamerica Press
5/18/2006
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Bolivia´s leader starts sweeping natural resource nationalization process with gas reserves.

After nearly 100 days as Bolivia’s president, Evo Morales fulfilled one of his campaign promises that put him in office Jan. 22: "the recovery of natural resources for the Bolivian people."

Morales’ unexpected move nationalize the country’s hydrocarbon reserves came May 1, Labor Day, a day which he has called the "Day of Dignity."

"The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources," said Morales, Bolivia’s first president of indigenous decent. "Today, we nationalize the hydrocarbon reserves, 10 years after their [privatization]."

The hydrocarbon nationalization came in the wake of a sharp drop in popularity for the Bolivian leader. According to a poll by the Bolivian daily La Razon, Morales’ approval rating dropped from 80 percent in March to 63 percent in April. His May 1 move was applauded by workers’ unions.

A previous legislation passed under the first government of President Gonzalo Sánchez de Lozada (1993-1997 and 2002-2003) left in state hands only petroleum located under Bolivian soil. After its extraction, it was transferred to transnational firms that replaced the state-run oil company YPFB, or Yacimientos Petrolíferos Fiscales Bolivianos.

With 53 trillion cubic feet valued at US$100 billion, Bolivia has the second-largest natural gas reserves in South America after Venezuela.

From 1996 to 2005, private corporations paid the Bolivian government a tax of 18 percent of their revenues, but following a referendum on July 18, 2004, in which 92 percent of voters approved the transfer of all hydrocarbon reserves for the "Bolivian state," social movements successfully pressured Congress, which increased the tax to 50 percent.

Under the nationalization decree, large gas fields which last year registered an output of at least 100 million cubic feet per day will pay the Bolivian government 82 percent of their profits. Smaller gas fields that produced less than that amount will continue to operate under the law valid until May 1.

Now, foreign companies operating in Bolivia have to hand over all of their production to YPFB and update their contracts within 180 days starting May 1. The Bolivian government added that it will not pay these foreign companies any compensation for these contractual alterations.

This is the situation facing Brazilian state oil company Petrobras, Spanish-Argentine Repsol-YPF, British companies British Gas and British Petroleum and French company Total.

Morales’ announcement and military takeover of the gas fields at first sparked resentment and panic amongst foreign energy companies operating in Bolivia, but in the following days, Repsol-YPF and Petrobras agreed to alter their contracts.

"There is no crisis between Bolivia and Brazil, and there will not be a crisis," said Brazilian President Luiz Inácio Lula da Silva May 3. "There will be an adjustment necessary to a long-suffering people who have the right to restore greater power over the riches it has."

But the Brazilian government made it clear in a press release that it will "act with firmness and calm in all forums to preserve the interests of Petrobras." The state-run company then froze its investments in Bolivia until the 180 days allotted by the Bolivian government to renegotiate its contract are up.

More than half the natural gas Brazil consumes originates from Bolivia. Each day, Brazil imports between 25 and 30 million cubic meters of gas from Bolivia at below-market prices, rates that will soon rise once Petrobras signs the new contract.

Morales is evaluating a $2-increase in the price of gas exports, currently set $3.5 per BTU (British Thermal Unit). For now, Bolivia has reached an agreement with Argentina — which buys between 4.5 and 5 million cubic meters of gas daily from Bolivia — and Brazil to renegotiate a more reasonable price.

"The prices will be discussed in the most democratic way possible between the involved parties," said Lula.

Morales announced that the wave of nationalizations will extend to all of this landlocked country’s natural resource sectors, including its mineral, forest, water and land resources.

Morales’ government is now preparing to retrieve lands that are not being used productively, accumulated by influential business owners and politicians during Bolivia’s dictatorships (1964-82).

This can be called "a new agrarian reform," Vice Land Minister Alejandro Almaraz said to the Bolivian daily La Prensa, referring the country’s first land reform in 1952.

Almaraz said that the process would be detailed before June 2, the date when 255 members will be elected to a Constitutional Assembly. This body will meet Aug. 6 in the central city of Sucre, the country’s political capital. (June 2 is also the date of a referendum on departmental autonomy.)

While Morales promoted the concept of a Constitutional Assembly to "refound the country" with "unlimited powers" — including the authority to remove lawmakers and executive branch officials from office — the Bolivian leader, in the end, approved a body that would respect represented powers and will not write the Magna Carta "from zero."


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President Evo Morales began nationalizing the country´s natural resources May 1, starting with the nation´s valuable hydrocarbon reserves. (Photo: Paolo Moiola)
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