Energy nationalization suspended

Talk about putting the cart before the horse!  Bolivia’s Hyrdocarbons Ministry aanounced that the nationalization of oil and gas industries will be temporarily suspended.  Seems the state company does not have the fund or operating capacity to take over production.  Morale’s nationalization program could end up as nothing more than a populist stunt if YPFB can’t secure $180 million in financing.  How much will failure here hurt the Morales adminstration, especially now as they are in the midst of rewriting the Bolivian consitution?  We will see…

An association of Bolivian oil and gas companies announced that since
May 1 more than 30 foreign and domestic petroleum businesses have
ceased operations or taken their business to other South American
countries.

Bolivian referendum and constituent assembly results

On Sunday July 2, Bolivians went to the polls to elect representatives to a Constituent Assembly which will meet to rewrite the Boilvian constitution. MABB has collected reactions of the world press. There is a suspicion that the assembly will used by Evo Morales to strengthen his grip on power following Hugo Chavez. According to the Washington Post,
Morales’ supporters won only 132 of the 255 seats in the Assembly, much
less than the 170 seats needed to secure a dominant two-thirds majority.

Bolivians also voted on a Referendum to grant each Departnment, the equivalent of a US State, Autonomy. From speaking with my aunt who is visiting us from Bolivia, Autonomy would essentially make each Department live off of its own tax revenues, instead of sending all taxes to the federal government to be redistributed among the 9 departments. Four departments voted in favor of autonomy. The wealthier eastern half of the country endorsed autonomy, based on the perception that more taxes are taken out than what they receive back in government services. We’ll have to see how the central government now approaches the revenues associated with nationalized industries, primarily the natural gas fields recently siezed.

On Sunday, each state voted on whether they wanted more
self-government, but how regional autonomy actually works won’t be
sorted until the constituent assembly convenes on Aug. 6. Still to be
decided is whether autonomy will apply only to those four states that
approved it or to all nine — and exactly what form it will take.

Morales begins land redistribution

An agrarian reform program redistributes 18,600 square miles of land to indigenous communities. Even private land that is not in "productive use" is subject to government seizure as part of the plan to redistribute one-fifth of Bolivia’s total land area. The current situation has the potential to increase civil strife and pit indigenous farmers squarely against wealthier land interests and may follow the so-called reforrms Hugo Chavez used in Venezuela.

Landowners’ groups have pledged to resist the programme. José
Cespedes, president of the Eastern Agricultural Chamber, said
landowners would form committees to defend their property.

Land in the western areas of the country, virtually untouched by the agrarian reform in 1953, is concentrated in a few families, according the UNDP 100 families own 25 million hectares. The current agrarian reform is a fairly populist attempt to curry favor but alone will do little to address the causes of indigenous poverty.

 


Sociologist Joaquín Saravia, a professor at the Universidad Mayor de
San Andrés, believes that land distribution on its own will not solve
the problem of poverty. Instead, he proposes a development plan based
on sound economic, environmental, political and administrative
criteria, linked to the creation of large producing regions.

Evo nationalizes Bolivia’s Natural Gas

In case you missed it, earlier this week, President Evo Morales nationalized Bolivia’s natural gas reserves sending soldiers in to secure the gas fields. He also gave an ultimatum to foreign investors to renegotiate the terms of their contracts and wants to audit their financial records. The government’s justification for the takeover is that the contracts given to the oil companies are not constituional since they were not individually approved by Congress as required.

Under
the terms of the decree, some 25 private gas companies have six months to renegotiate
their contracts with the Bolivian government or be expelled, and they will be
forced to sell at least 51 percent of their holdings to the state.

This has prompted oil companies to reasses their investment plans and pleased Evo’s indigenous supporters. Although foreign oil companies might pull out, Venezuela is already stepping in to help.

Chavez and Morales emerged from a three-hour meeting to
announce a "strategic alliance" between Bolivia’s state-owned
YPFB and Venezuela’s PDVSA to develop gas industrialization
projects, a partnership to be formalized later this month.

Jefferson Marley of the Washington Post recommends reading the Financial Times of London to get a fair picture of waht is going on but laments having to pay for such "centrist coverage".

Today’s FT reports:
"The government says it will purchase a majority stake [in privatized
natural gas operations] without expropriation. Andrés Soliz Rada,
hydrocarbons minister, plans to create a special government auditor to
determine the value of any compensation."

In other words, this isn’t war. This is let’s have a meeting.

Finally, Aleksander Boyd remarks that this is just Morales following the Chavez’s example, and Americans and Europeans shouldn’t be so shocked by this move.

It is also true that he’s following the chavista booklet: i.e. win the
presidency, purge institutions whilst waiting on the National
Constituent Assembly that will do away with all elected powers, govern
by decree, shred contracts… How can anyone be surprised, we have seen
this movie before, haven’t we?

In Columbia, coca production rising

On the BBC, another article looking at the neglible impact of the US governement’s efforts to eradicate coca cultivation, despite spending $4 billion dollars since 2000. I especially like quote from the Office of National Drug Control Policy, who “insisted it was working” and more land was discovered to be under cultivation because the survey area increased. Here’s a tip for them, if they want to show that its decreasing, they might have to shrink the survey area.

“Coca production was not going to be reduced just
because fumigation flights spray some fields, as long as these farmers
don’t have any other economic options, except to cut down forests to
grow coca somewhere else,” said Adam Isacson of the Washington-based
Center for International Policy.

Via Hit and Run.

Hotels Bombed in Bolivia

A Uruguayan woman and an American man are being held after two small hotels were bombed in La Paz. Sounds like the bomb blast are at smaller hotels in the city, in "El Centro" of La Paz, themain downtown area. There are 2 casualties and 4 injuries from the first explosion.

The blast, close to government headquarters, occurred
late on Tuesday. Hours later, another hotel in the city was rocked by
an explosion

Links:

Coca production on the increase

Uh oh, coca production in Bolivia "has exploded".  Apparently, coca acreage has risien in Peru and Bolivia because of aggressive anti-drug efforts in Colombia.  So, basically the US war on drugs, specifically the coca eradication tactic, has managed to move coca production.  Hurray, must be time to ask Congress for more money to fight the war on drug.  We need to produce more anti-drug commercials for kids not to watch.

Peru and Bolivia were top cocaine producers in the 1980s. But after
officials cracked down on coca farmers, most of the production moved to
Colombia in the 1990s. Since 2000, Washington has spent more than $4
billion to help Colombia combat cocaine and heroin production, although
many critics have predicted that traffickers would simply move to other
places in what is known as the "balloon effect.”

Also noteworth, two-thirds of the increase in coca cultivation in Peru was dur to changes in how the US gathers data on coca acreage.  Hmm, I wonder if someone is manipulating the numbers for exageration?  The changes may be outlined here.

In Peru, coca cultivation in 2005 soared 38 percent to 94,000 acres.
But Arias said two-thirds of the increase was attributable to a change
in the way the U.S. government gathers data on coca acreage.

Evo Morales mobilized by US incompetence?

Another examples of US actions that backfired included threatening to pull all aid to Bolivia, four years ago.

It has happened before. During the 2002 Bolivian elections, when Morales was a first-time candidate little known outside of the country, the U.S. ambassador at the time, Manuel Rocha, stated publicly that if Morales was elected, the U.S. would have to reconsider all future aid. Most observers, and Morales, too, who speaks of the episode with a combination of amusement and satisfaction, say that it got him and MAS at least 20 percent more votes.

Bolivia News – Evo Morales making friends, influencing people

Bolivia’s president elect is on a worlwide tour visiting foreign governments including China, Cuba, Spain, the Netherlands, France, Venezuela, and brazil. The US has asked to talk to him, according to the State Department. Morales may meet with the US once he’s been inaugurated.

Shannon emphasized how important it is for Washington to continue the US-funded anti-drug programs and coca plant eradication programs in Bolivia.

More interesting:

Coca is the raw material from which cocaine is processed, but it has also been used in traditional medicine in Bolivia.

Morales wants to end the US-sponsored coca eradication program that he says has failed to curb drug trafficking in Bolivia.

Morales, a former coca farmer organizer, made it clear in an early January meeting with US ambassador to Bolivia David Greenlee that he will fight drug traffickers but will not eradicate coca cultivation.

But he also met with China’s presiden, and described the Chinese as an “idealogical ally”. He also offered to allow them to develop Bolivia’s substantial natural gas reserves.

Morales’ visit to China came at a propitious time for Beijing, which is also eager to develop links with Latin America. China sees nations like Bolivia as new sources of fuel and raw materials as well as new markets for its exports.

Evo Morales still ahead in Bolivian presidential polls

It still looks like Bolivians will elect Evo Morales, a coca farmer who’s promised to make coca growing legal again, as the next president.  Elections will be held on the 18th of the month and Morales has an 32.8% to 27.7% lead over the other leading candidate Jorge “Tuto” Quiroga.  Morales lost the 2002 elections by a mere 2 points. No matter who wins, the likelihood of the next government lasting beyond the year is low.

But this being Bolivia, nothing is simple. Unless Mr Morales gains more than 50% at the polls, the next president will be decided by a Congress vote – which is likely to go against him. The outcome could be catastrophic, the country becoming once again riven with protest and instability.