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November
6, 2006
Evo Morales' Complete Victory Over Big
Oil
The
Progress in Bolivia
By NEWTON GARVER
I have previously argued that Evo Morales
might best be described as a genius rather than put into any
of the ready-made political categories that so regularly distort
both news and policy. One main reason for this is his combination
of principle and pragmatism, leading him into confrontations
in which he does not attack opposing persons or institutions
but instead invites them to join him in a struggle for justice.
The media regularly associate Morales with Chavez, but Chavez
is more bully than genius, and it is impossible to imagine Morales
denouncing Bush as a devil, as Chavez did at the United Nations.
The other main reason is his extraordinary ability to exploit
the moment, as he did after his election with his famous striped
alpaca sweater and late this past summer by waving a coca leaf
during his speech at the United Nations. Another example, cited
in my previous article, was his use of troops in the nationalization
of oil and gas reserves on May 1, 2006, which of course garnered
world-wide press attention, even though he knew full well that
there was no opposing armed force and that the nationalization
could as well have been accomplished by signing decrees in his
office in La Paz.
At the time of the nationalization
there was a near-consensus among analysts that the nationalization
would fail. There were two reasons for this belief. One was
that the opposing parties were the Brazilian government and very
powerful and well-connected international cartels, who had plenty
of other assets and were powerful enough to just leave Bolivia
rather than renegotiate contracts that would give the lion's
share of revenues to a desperately country that had few alternatives.
The other reason was that neither the Bolivian ministry of mines
nor the national petroleum company, YPFB, had the expertise required
to run the operation that the renegotiated contracts envisaged.
Both reasons were based on solid knowledge of the details of
the industry, so the skepticism was well founded.
The decree of May 1 gave the
parties exploiting the hydrocarbon resources of Bolivia six months
in which to renegotiate contracts with the government, after
which they would have to leave and their property would be subject
to confiscation. Bolivia's position in the negotiation was that
a return on investment of 15% to 18% would be fair and just for
the drilling and exporting companies, and that the balance of
profits and revenues should revert to the Bolivian people through
the Bolivian government. At the time of the decree and the announcement
of this demand, the popular cry was that the looting must end,
and Morales himself referred to the process by which mineral
resources of Bolivia had been extracted and exported for the
previous four hundred years as "looting." The slogan
was very popular, especially among the indigenous people of Bolivia.
Thus populism and a call for justice were added to the power
play of nationalization and the threat of confiscation. The
stakes were high and the outcome uncertain.
Negotiations proceed slowly
over the summer, and intransigent statements from Brazil darkened
the prospects for a favorable outcome. This sentiment encouraged
the opposition to the government of Evo Morales, which seemed
likely to suffer a setback in its most significant initiative.
Other challenges faced the
government toward the end of the summer. In September there
was a clash at the tin mines near Oruro, leaving twenty miners
dead. The clash occurred between the government employees who
now operate the mines and a union of former miners who insist
on being allowed access now that the price of tin has risen.
The roots of the dispute go back a quarter century, when the
price of tin collapsed on the world market and thousands of miners
were thrown out of work. (Many of them migrated to the Chapare
region to grow coca.) Now that the price of tin has risen again,
many of those who lost their jobs want an opportunity to share
in the good fortune, but the skeletal force kept on in the mines
did not want to share the bonanza. It was a conflict easily
amenable to negotiation and compromise, since the pie that needed
to be split was growing, but the ministry did nothing. After
the bloodshed Morales himself intervened, dismissing both the
minister and another top administrator, and more miners now have
access to jobs at the tin mines. That the armed conflict led
to many deaths was a black mark for the government, but the decisive
steps taken to get matters back on track showed its competence.
In October the city of La Paz
was shut down by the union of drivers of buses and taxis. At
first they simply called a one-day strike to protest changes
in some bus routes and to demand, quite unreasonably, that a
pedestrian area that for a decade has been the place of business
for 400 street vendors be reopened to vehicles. During the day
the strike was extended to be indefinite, and drivers parked
their vehicles so as to block the main streets of the capital.
Although Morales has his base of support in the unions of miners
and coca growers, this union supported an opposing candidate,
making the dispute less amenable to mediation. But there was
not popular support for the shut-down, and it and the strike
were ended after the government made minor concessions.
The main challenge to the government
remained the gas and oil contracts. November 1, the end of the
six-month period, was a make-or-break day for the government.
The first hint of a solution came early in October, when Argentina
signed an agreement to buy natural gas on terms much more favorable
to Bolivia, and in much greater quantity than before. But Argentina
is not among the producers or explorers. The result was finally
known at the very end of October, and it was a complete victory
for the government. Petrobras of Brazil, the largest explorer/producer
in Bolivia, broke the news, and the agreement of all the others
was nearly simultaneous. The new contracts give Bolivia between
50% and 82% of the net revenues, they commit Brazil to investing
$1.5 billion in new infrastructure and exploration, and they
require that a portion of the profits of the international consortiums
be invested in other industries in Bolivia.
So Evo Morales achieved what
most of the analysts thought would be impossible, a complete
victory in his struggle against the foreign companies exploiting
Bolivia's natural resources. In his remarks hailing the agreements
Morales stressed that this is a favorable outcome for everyone
and noted that it had been achieved without the expropriation
of the property or assets of the foreign companies. He looks
forward to years of continued cooperation.
Having achieved what seemed
to many impossible, Evo Morales now enjoys greater political
strength and credibility with which to proceed with other steps
on his agenda. The three most pressing and exciting are nationalization
of the mining industry on terms similar to those of the petroleum
industry, an agreement with Chile, and redistribution to peasants
of huge tracts of land in the Amazonian provinces of Santa Cruz
and Beni. All of them involve technical and legal difficulties
as well as overcoming entrenched opposition. Nationalization
of mining will probably occur first, but agreement with Chile
is most exciting and received most emphasis in the President's
remarks following the agreements about gas.
Bolivia originally had twice
the area of the present state, large chunks having been taken
by each of its five neighbors. The piece that Bolivia most wants
to get back, and whose loss still arouses most popular resentment,
is the access to the Pacific Ocean that was lost to Chile at
the end of the nineteenth century. The economic asset lost at
the time was the guano, which Chile has since sold as fertilizer.
This area in the northen part of Chile now has little economic
value, so far as its resources are concerned, but it is a source
of national pride to many Chileans. On the other hand Chile
has a rapidly growing economy that depends to a large and growing
extent on imported fuel. Chile's plans to expand its own supply
of power through hydroelectric projects in its southern mountains
and valleys are controversial and would in any case be inadequate
to meet currently foreseen needs. So these agreements that stabilize
the production of natural gas in Bolivia suggest an answer to
one of Chile's most pressing needs: import energy from Bolivia.
Can it be arranged?
At the present time Chile is
the only immediate neighbor of Bolivia with which Bolivia does
not have good working commercial relations, the reason being
resentment over the loss of access to the sea. Technically supplying
gas to Chile would be easy, and the same pipeline that delivers
the gas to Chile could also bring gas to a port from which to
could be shipped to Mexico and California. The problem is political.
The same popular movement that brought Evo Morales to the presidency
has been adamant that any gas sold to Mexico or California be
shipped through Peru rather than through Chile, because of Chile's
continued occupation of what had been Bolivia's only coastline.
Evo Morales has set as one
of his goals to arrange a politically acceptable commercial agreement
to supply Chile with gas on a long-term basis in return for Chile
ceding Bolivia sovereign access to the sea. Morales attended
President Bachelet's inauguration, the first Bolivian President
ever to attend such an event. Both Bachelet and Morales are
socialists and both have risen to their high office from outside
the traditional ruling class. Evo Morales is, as usual, approaching
the matter with a combination of principle and pragmatism: it
is only just that Chile should return to Bolivia what was taken
by force of arms, and it is only reasonable that Chile should
have a material reward for doing so. Since the nationalization
of hydrocarbons means that Bolivia owns and controls the gas
that is extracted, it is now in a position to supply Chile with
those rewards.
The new natural gas contracts
are an enormous achievement for Morales, for they strengthen
him both domestically and internationally. It will be interesting
to see what happens next. Morales continues to impress, and
to make his little nation fascinating to watch.
Newton Garver is SUNY Distinguished Service Professor
Emeritus at University at Buffalo. Eleven of his essays on war,
power, ethics, truth and justice in the US during the Bush years,
and the recent struggle for human rights and political decency
in Bolivia, were recently published in Limits
of Power: Some Friendly Reminders.
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