William Powers | The New York Times | May 6, 2006
http://www.nytimes.com/2006/05/06/opinion/06powers.html?th&emc=th
OUT for a stroll here this past Monday, I stopped in my tracks.
Bolivian soldiers had surrounded my local gas station, where a
banner read, "Property of the Bolivian State." They were among
several thousand soldiers posted at the more than 50 oil fields and
refineries around this landlocked nation, which holds the
continent's largest natural gas reserves after Venezuela. Latin
America's newest populist leader, President Evo Morales, had just
issued a decree nationalizing Bolivia's petroleum.
In reaction to the news, the European Union warned that the move
could tighten global energy supplies and increase prices at the
pump. Other international analysts have expressed concern about a
resurgence of dangerous "energy nationalism." However alarming
Bolivia's move might appear on the surface, though, there is
surprisingly little in it to worry the United States and the West.
This is simply the way democracy sometimes works. Oil and gas
nationalization has been the main political issue in Bolivia for the
last several years. Mr. Morales, an Aymara Indian farmer, won a
landslide victory in December on a promise to nationalize the gas
industry. Now he's delivering on that promise he made to the
country's nine million citizens.
And when viewed from a Bolivian perspective, this is less of a
nationalization than a return to constitutionality. Mr. Morales has
a strong legal argument that the privatization that took place in
the mid-1990's was unconstitutional. Under the Bolivian
Constitution, the contracts that gave control to private companies
were supposed to be approved by Congress, and they were not.
Add this to resentment on the street over Bolivia's Transparency
International corruption ranking last year (placing its leaders
among the world's most dishonest) and a long history of swindles
where natural resources like gold, silver, timber and petroleum have
been "privatized" into the global economy to the sole benefit of a
few very wealthy Bolivians.
Nor is this a classic nationalization in the sense of the
confiscations that took place in the region in the 50's and 70's. In
those days, Latin American governments expropriated everything and
kicked out the companies the next day. This time Bolivia will exert
greater control over the companies, including significantly higher
taxes and 50 percent-plus-one state ownership, but Mr. Morales has
pledged to create an environment conducive to private profit-making,
and the government has repeatedly stated that it is
a "nationalization without confiscation," with no expulsion of
foreign companies nor expropriation of their assets.
Then why did Mr. Morales send in the army? In a word, politics. His
dramatic televised decree delivered in a hard hat from a Tarija
oil field was necessary to placate masses of radicalized Bolivians
who demand "confiscation without compensation" to the companies. The
majority of Bolivians support nationalization out of acute
frustration over two decades of failed "neoliberal" policies by the
International Monetary Fund, which tied sorely needed loans to
privatization, debt reduction and relaxation of labor standards.
Bolivia was one of the first Latin American countries to adopt this
approach back in the mid-1980's. State-owned companies were sold
off. Government spending and regulation was scaled back. Foreign
capital was courted. All on the promise of a new dawn of well-being.
Twenty years later the average Bolivian is worse off than before.
Exports have declined. Bolivian incomes are stagnant, and half of
the population lives on less than $2 a day. The rest of Latin
America has experienced similar results from neoliberalism, leading
to a general disillusionment that has given rise to leftist-populist
governments.
Even so, some continue to insist that Bolivia's new nationalization
policy only makes things worse by scaring off future investments.
This does not appear to be true. Although the principal companies
invested here Brazil's Petrobras, Spain's Repsol and Britain's BG
Group have predictably denounced the nationalization, they are not
about to pull up stakes. The companies will still profit under the
new rules; they won't see the huge profits they enjoyed under lax
Bolivian control and the global rally in commodities prices, but
they will make money. Shell, which owns 25 percent of an oil and gas
pipeline company here, already broke with the other companies by
announcing that it remains interested in continuing to "participate
in Bolivia's hydrocarbon sector."
The principal danger in Bolivia is that Mr. Morales could go beyond
his democratic mandate and detour into a more extreme resource
nationalism hostile to democracy that then spreads among Bolivia's
energy-rich neighbors. But the world can only hasten such an outcome
by trying to punish Mr. Morales.
The world, such as it is, needs gas and oil, and Bolivia and its
neighbors need to sell it. Bolivia is just struggling for a way to
make markets work.
William Powers is the author of "Blue Clay People" and the
forthcoming "Whispering in the Giant's Ear: A Frontline Chronicle
from Bolivia's War on Globalization."
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