Bolivia Charts Course Between Popular Anger and Big Business Threats

By RAUL VASQUEZ Pacific News Service
Friday July 23, 2004

A historic, five-question referendum on Bolivia’s energy resources, approved by Bolivians on July 18, reveals the risky middle path many Latin American leaders now tread as they try to translate popular discontent into real political change. 

In Bolivia, South America’s poorest country and home to the second-largest natural gas reserves on the continent, President Carlos Mesa faces just such a test. He’s boxed in by opposition forces from the left, who demand the complete nationalization and expropriation of the privately controlled energy industry, and the right, which threatens severe economic and political repercussions should he meddle too much with the status quo. 

But meddle he must. Mesa’s legally binding referendum, the first of its kind in Latin America, was born out of the country’s bloody “Gas War,” a popular rebellion last October that killed 60 people. Sparked by the imminent export of natural gas to Mexico and California through a Chilean port (Bolivians still resent Chile for confiscating Bolivia’s only outlet to the sea 116 years ago), a spontaneous and angry campaign of strikes, marches and roadblocks spread like wildfire across much of the country and dragged the economy to a halt. Then-president Gonzalo “Goni” Sanchez de Lozada ordered a deadly repression that sunk his waning popularity. Labor leaders and political activists, sensing the kill was near, clamored for Goni’s head and the complete nationalization of the country’s gas industry. 

On Oct. 16, Goni fled to Miami, leaving Mesa, his vice president and an ex-television journalist with no political experience, to contend with the heady demands for nationalization. 

At the heart of Mesa’s referendum is the voiding of Goni’s 1996 law that opened up the domestic oil and gas industry to foreign control. It also reactivates YPFB, the state-owned energy company doormat for nearly a decade; “recuperates the property” of all natural gas and petroleum lying at the mouth of the well; and raises taxes “up to 50 percent” on private energy firms. 

Those measures aren’t expected to appease the country’s pro-nationalist, anti-neo-liberal forces, including the Movement Towards Socialism (MAS) party, the second largest force in congress, led by coca farmer union boss Evo Morales. That’s because Mesa says his energy policy isn’t retroactive -- none of the more than 80 contracts awarded to foreign energy firms since 1996 will be revoked. These are free again to export Bolivia’s oil and natural gas abroad. In addition, the referendum does not specify when the state will raise taxes on private energy companies, leaving many questioning Mesa’s conviction to gain sovereignty over the country’s last important natural resource. 

Mesa warns that a full nationalization is akin to “declaring war on the world.” Such a move, he says, would trigger international sanctions and the flight of badly needed foreign investment. Others caution that full nationalization would spark a military coup designed to “reinstate order.”  

Yet the fact remains that in Bolivia, as in neighboring countries, the privatization policies implemented in the last decade haven’t come close to achieving what was promised, such as the creation of more jobs, significantly more tax revenue for the state and improved services. Most Bolivians still use wood to cook, even as 55 trillion cubic feet of natural gas, worth over $200 billion, sits under their feet (much of it slated for export to energy-hungry nations like Brazil, Argentina and the United States).  

But altering the privatization policies inevitably challenges the interests of billion-dollar foreign investors. 

Two days before the referendum, the investigative weekly Juguete Rabioso revealed that dozens of journalists, intellectuals and high-ranking cabinet officials received unknown quantities of money from a fund established by transnational energy firms. And in the months leading up to the referendum vote, several articles appeared in the press stating the IMF and the World Bank would abandon Bolivia (and its $5 billion national debt) if it expropriated its hydrocarbons. 

Mesa isn’t the only regional leader walking a tightrope.  

Venezuela’s left-wing President Hugo Chavez tasted the fury of opposition forces (labor strikes and an allegedly U.S.-backed military coup almost ended his rule in 2002) after handing total control of PDVSA, South America’s largest energy producer and exporter, back to the Venezuelan state. Chavez still faces a contentious referendum on his leadership on Aug. 15.  

In Argentina, President Nestor Kirchner, who assumed power one year ago on the heels of Argentina’s worst political and social crisis in memory, also faces rumors of a destabilization campaign aimed at his administration. Many analysts attribute the threats to vested economic interests that oppose the hard line Kirchner has taken against private energy firms operating in the country (such as Spain’s Repsol), as well as his recent decision to create ENARSA, a new state-owned energy company that will compete with private energy firms. 

But as critics contend, the answer to Bolivia’s and the region’s inconformity isn’t a return to statism, as many Marxist and Trotskyite ideologues desire. Until now, no one has emerged with a sound alternative to the neo-liberal economic policies of the 1990s. At best, Mesa’s referendum buys Bolivia’s fragile democracy more time, until he or someone else can lead the country out of its gloomy state. But in the long run, it isn’t likely to quell the deep discontent and craving for change simmering in the hearts and minds of most Bolivians.