Winds
of change are blowing in Bolivia at present, and probably not without
reason. The country is witnessing political and social unrest of a nature
and intensity unlike anything seen earlier. This crisis ridden nation
has the distinction of being the poorest country in Latin America, with
poverty levels as high as 70 percent. 6 out of every 10 persons in the
country and 9 out of every 10 in the country side live in poverty! Unemployment
rates are expected to reach 10%, whereas 13% of the employed are thought
to be actually underemployed. The economy, which is currently in recession,
is barely growing at a rate of 0.16 percent at last count by the IMF (Mar-Jan
2002)[1] The poorest 10 percent
of the country's 9 million people earned 0.3 percent of total per capita
income in 1999, while the richest 10 percent received 42.3 percent.
Such disparities are the root cause behind the general discontent among
the masses towards the governing classes. Bolivians recently forced out
their newly elected president- the pro free-market and anti- drugs campaigner
for the US, Gonzalo Sanchez de Lozada out of office after he announced
plans of exporting Bolivian natural gas to North America via Chile. This
came in the wake of unprecedented protests and demonstrations by the civil
society following the announcement, by student groups and unions which
left at least 70 person dead and countless injured.
The massive public protests and the deaths following the announcement
to export gas using Chile's ports caused the leader of the 'New Republican
Force" Manfred Reyes Villa a socialist, to withdraw support from
the newly elected government, which forced Lozada to resign and flee the
country and the subsequent selection of Carlos Mesa to the post of president.
These demonstrations have been dominantly spear headed by the indigenous
Quechua and the Aymara Indians led by their leaders Evo Morales of the
'Movement towards Socialism', joined by the native Indian guerrilla leader
Felipe Quispe. The elections saw Lozada winning by a slight margin over
Morales. Morales had already emerged as a force to reckon with since last
year, when he came a close second to Lozada, who gained 22.5 percent of
the votes, while Morales came a close second with 20.94 percent.
The last government lead by Jorge Quiroga had submitted a report making
an offer of selling gas to the Californian market. This multi-million
dollar project required the joint collaboration of four nations, two in
North America and two in the South. The demand side would involve Mexico
and the U.S whereas the supply side, Bolivia and one other Pacific nation,
either Peru or Chile. The project would involve the drilling of 16 wells
up to 5000 meter deep. The drilling alone requires a US $480 million investment,
with the total project investment reaching US $ 1.7 billion[2].The
government had left the decision on the choice of country for the proposed
pipeline for the next incoming government.
Lozada's announcement meant that the natural gas would be exported to
Mexico and US via a pipeline trough Chile which is a cheaper option by
about $600 millions as against the Peruvian option. Chile is seen as a
rival after 1875 when it won Bolivia's only accesses to the Pacific Ocean
in war. Bolivians see the lack of access to the sea as the main reason
for the nation's impoverishment and economic backwardness. Diplomatic
relations between the two countries were cut off in 1978. Moreover the
gas deal would completely privatize the sector with foreign firms drilling,
pumping and buying the gas, thus the major chunk of the revenue going
to the private firms, where as a mere 18% of the returns falling into
the hands of the Bolivians.
The announcement by Lozada of his plans sparked off widespread and intense
protests across the country. The reservations of the people with the proposed
deal drove the peasant groups, the student unions and the Indians, who
have been opposing all forms of foreign interventions, to react violently,
leading to the country wide road blocks and protests. Thousands of people
took to the streets and demanded Lozada's resignation. Protests in many
regions resulted in foreign tourists being stuck in their vehicles for
days, which invited police to come in to secure their safe passage. The
clashes which followed between the police and the protesters saw police
using excessive force sparking of violence and rioting, leading finally
to the deaths of 70 people. Such a repressive move by Lozada not only
fueled the fire of mass discontent but also led to the withdrawal of support
by key members in the Lozada coalition.
The Indians, the unions and the students all want the gas industry to
be nationalized for employment and income generation of the locals first.
They demand that the future of Bolivia's natural gas be decided by its
people and not be controlled by a few transnational oil companies robbing
the Bolivians of their natural wealth.
However, many observers feel that Bolivia may miss the boat on natural
gas. Bolivia has the second largest natural gas reserves in Latin America
after Venezuela, totaling some 55 trillion cubic feet. If Bolivia could
successfully export its gas internationally, it would bring in much needed
and substantially large foreign exchange inflows and boost the economy
like Venezuela, Argentina and Brazil.
Neighboring Peru is leading the natural gas race and is already putting
finishing touches to its end of an 18 year deal to sell 2.7 million tons
of gas annually to Mexico from its Camisea field.
"Peru has shown the North American market that it has the capacity,
the will and the political backing to deliver natural gas while in Bolivia
we're stuck in existential angst that is giving Camisea a big advantage,"
said Carlos Alberto Lopez, Bolivia's former deputy minister of hydrocarbons[3].
"There has only ever been a market for one project, never for a joint
project and still less for two projects. Bolivia is about to miss the
boat," he told Reuters in a phone interview.
With the Mexican market under its belt, Peru is certainly eyeing the big
US market. Meanwhile Bolivia is still undecided about the fate of its
gas reserves in the face of intense debate among the free market proponents
who favor exports and the socialists who want to nationalize the industry.
Thus there is mounting pressure, both economic and political for any government
in power to reach a decision soon on the choice of the route the pipeline
should take. This is especially so if it hopes to comply with the timetable
outlined for the plan to export gas to the US and reap much needed economic
benefits from the abundant natural reserves. The Bolivians also need to
beat the Peruvians to the race before the latter establishes itself as
the sole provider of natural gas from South America. According to a recently
submitted report by the US department of energy to the congress, the US
and its oil companies are eyeing the Latin American reserves as the second
most important source after the Gulf region and view Bolivia among eight
other nations as a potential supplier[4].
Besides the US, the British and the French too are interested in the world's
biggest source of clean fuel. British energy secretary Brian Wilson met
the foreign minister and the hydrocarbons minister last year to talk about
the offer made by the Pacific LNG consortium made up of British Gas, British
Petroleum and Spain's Repsol-YPF- who favor the Chilean option. On the
other hand, the Belgian Transnational and French Total E&P Norge As
are backing the Peruvian option.
The privatization option is the quickest option of an early exploitation
and sale of the countries gas but not necessarily the populist one. The
nation and its people have rightly taken the decision making power in
their own hand, however they would have to decide soon if they hope to
reap any economic gains at all from their largest natural resource.
To add to their worries concerning the natural gas sector, Brazil is demanding
a renegotiation of prices and volumes of its natural gas imports from
Bolivia. Brazil's federal gas company Petrobras has a contract with the
Bolivian state gas supplier Yacimientos Petroliferos Fiscales Bolivianos,
under which a 3,150-kilometer pipeline has been built between to two nations
in which Petrobras has 51% stake and is committed to import at least 24
million cubic meters of gas daily from 2004 onwards.
However the market conditions which were foreseen since when the deal
was signed have changed for the worse. The 1999 currency crisis hit Brazil's
economy hard, making investors flee the electricity industry. As a consequence
the development of the gas fired electricity industry has been much below
expectation, thus envisaged levels of sale of natural gas were never reached.
As a fall out, the Brazilian officials have been demanding a revision
of the prices and volumes in the contract due to a slump in local demand
as well as the removal of the "take or pay" clause under which
Petrobras must pay for a certain volume of natural gas even if it does
not use it. Petrobras currently imports about 13 million cubic meters
of Bolivian gas per day.
Amidst widespread opposition and protests against the decision to export
the countries gas to North America, the newly elected president Carlos
Mesa has announced that he will call for a public referendum on the fate
of the nation's gas reserves. While on the one hand the increasingly popular
Evo Morales and his followers totally oppose any exports before the nationalization
of the industry and fulfillment of domestic needs, one the other hand
civil leaders and businessmen in the southern Bolivian state of Tarija,
which is home to most of the nations gas reserves, are against the public
referendum and want the gas to be exported for economic gains of all and
favour the cheaper Chilean option.
The left parties and the extreme leftist like guerrilla leader Felipe
Quispe are of the opposing opinion that the high level of corruption in
the government would never let the benefits of such sale reach down to
the masses.
Evo Morales the Indian coca proponent, who has gained unprecedented popularity
among the two-third Indian population of Bolivia after leading a bloody
protest against the US backed coca eradication campaign, is now seen as
a potential savior of the people. Son of a peasant himself, this ex-miner
has become the voice of the Indian majority in Bolivia, who have lost
all trust in the politicians and the two decade old economic reform progress
which they feel has done nothing to improve their lot. To top it all,
the US backed ban on coca cultivation has severely hit the farmers. Morales
wants the lifting of the ban on coca and legalization of cultivation.
He also wants the nationalization of all natural resources like natural
gas which Lozada wanted to export through foreign consortiums. He views
the coca ban and the new economic policy as imperialist interventions
of the US in Bolivia calling for an anti-capitalist, local, indigenous
and socialist future for his country[5].The
response he has received has been overwhelming[6].
The new president Mesa and thus Bolivia is faced with the tricky task
of balancing on one hand the view of the majority of the much impoverished
and impatient indigenous population who are against gas exports, especially
to the imperialist US and the view of the economists and the orthodox
right wing political elite who see the countries natural gas reserves
and its export as the difference between the nation's economic recovery
and persistent recession. The decision now rightly lies with the people,
who however will need to reach a decision quickly.
November 25, 2003.
[1] http://news.bbc.co.uk/1/hi/business/1400337.stm
[2] http://www.commondreams.org/headlines03/1014-05.htm
[3] http://story.news.yahoo.com/news?tmpl=story&u=/nm/20031020/fin_enr/bolivia_gas_1
[4] http://allafrica.com/stories/200310280098.html
[5] http://www.networkideas.org/themes/trade/jul2002/tp09_Bolivia.htm
[6] http://www.networkideas.org/themes/trade/jul2002/tp09_Bolivia.htm
Source : http://www.gasandoil.com/goc/news/ntl24023.htm
http://search.news.yahoo.com/search/news/?c=&ei=UTF-8&p=bolivia&nytp=1
Peter Beaumont, foreign affairs editor, Sunday October 26, 2003
The Observer.
http://www.spectrezine.org/global/bolivia3.htm
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