In a move that stunned the imperialist world on May Day, President Evo Morales announced Decree 28701 nationalising Bolivia’s oil and gas industry. Whilst tens of thousands of demonstrators poured through the streets of La Paz with placards declaring ‘Nationalisation of hydrocarbons now’ and ‘Out with the looting transnational corporations’, Morales was in San Alberto gas field in Tarija province in the south east of the country, reading out Decree 28701.
In a simultaneous operation, troops entered 56 gas installations throughout the country and took over the offices of the principal foreign companies. Their purpose was to prevent key documents being removed by the multinationals in advance of any government audit of their accounts. Bolivia’s gas reserves, some 50 trillion cubic feet, are the second largest in South America and are worth an estimated $70 billion. Control of these resources is essential if they are to be used for the benefit of the Bolivian people: nationalisation is expected to increase the state’s income by $720 million per annum.
Since coming into office in January, Morales and his MAS government had not explained how they were going to implement key election promises. Indeed there were signals that they were prepared to consider a limited extension of public ownership and a more onerous tax and royalty regime for the oil and gas industry. However, as FRFI has pointed out, there are other forces at play.
Any hope of negotiating a deal with imperialism in Bolivia’s interests were dealt a mortal blow with the announcement that Peru and Colombia had agreed bilateral trade deals with the US, one provision of which would open up their markets to cheap, heavily-subsidised US exports of soya beans. This amounted to a declaration of economic war on Bolivia since both South American countries were key markets for Bolivia’s soya bean exports, worth $500m a year; Colombia alone took 60%. However, simultaneous negotiations between Bolivia on the one hand, and Venezuela and Cuba on the other, resulted in Bolivia formally joining the Bolivarian Alternative of the Americas (ALBA) on 29 April. One part of the deal was that Bolivia will now be able to sell its entire soya bean production tariff-free to Cuba and Venezuela. Venezuela will pay in oil, and Cuba will provide medical professionals and teachers.
Morales’ announcement therefore was a response to escalating imperialist opposition on the one hand and the demands of a militant electorate determined to see the restoration of sovereignty over one of its crucial natural resources on the other. The agreement with Cuba and Venezuela is critical: it gives the Morales government economic support and neutralises for the moment his main political opposition, the ruling class in Santa Cruz province where soya production is located.
The terms of the nationalisation decree require all petroleum and gas companies to hand over their entire production to YPFB, the state-owned company, from 1 May. The two largest gas fields, owned principally by Petrobras (Brazil) and Spain’s Repsol YPF, will have to pay an 82% tax on production while contracts with the companies are renegotiated over a 180-day period. If negotiations fail, the companies will be required to leave the country. The taxation on smaller operations will remain at the 50% level agreed by the previous government following extensive protests in May 2005. Meanwhile YPFB will be restructured to take control of the entire industry from exploration to marketing. The Bolivian state will also buy a 51% stake in the country’s two principal gas refineries, both owned by Petrobras. Petrobras itself presently owns some 45% of the Bolivian oil and gas reserves, Repsol YPF a further 25%.
Howls of protests from the imperialists and their South American allies greeted the announcement. The Spanish government voiced its concern and President Lula called a special cabinet meeting to protest at the action. With no Bolivian concessions, Brazilian Foreign Minister Celso Amorim threatened the withdrawal of the Brazilian ambassador from La Paz unless there was compensation, perversely blaming Chavez for the events. EU foreign policy chief Javier Solana expressed the imperialists’ standpoint when he declared that ‘We have to keep on talking, we have to keep on trying to influence the behaviour of countries…[about] the basic rules of the international economy’. The Times thundered about ‘this petulant display of nationalism’ declaring ‘Even Hugo Chavez, the egotistic Venezuelan leader whom President Morales sees as a role model, has trodden with great skill’. Meanwhile Tony Blair spoke of his ‘concern’, saying ‘the most important thing is that everyone uses the power they have sensibly’ and warning that ‘people are worried about energy supply in the future…what countries do in their energy policy…matters enormously to all of us’.
Arriving at the Vienna summit of European and Latin American countries on 12 May, Morales rejected imperialist demands that he should have negotiated with the multinationals beforehand ‘There is no reason why I should have to ask and consult about a country’s sovereign policies’, he declared. Centre-right MEPs boycotted his speech to the European Parliament on 15 May, on the grounds that the nationalisation proposals violated human rights! Morales has said that companies will not be compensated if they are deemed to have already received an adequate return on their investments, a stance which echoes that of Chile’s Allende government which refused to compensate US mining companies in 1971 when the copper industry was nationalised.
Morales has promised to start a programme of land redistribution involving 54,000 square miles in Santa Cruz province which were handed by former President Hugo Banzer to his cronies in the 1970s. The area is approximately 10% of the Bolivian land mass and is at present uncultivated. There have been constant struggles by landless farmers and indigenous people against the large landowners. Morales has also told the Bolivian people that the nationalisation of gas and oil is ‘just the beginning… tomorrow it will be the mines, the forests and all the natural resources’. It is not surprising that his personal approval ratings stand at over 80%.
On 15 May the Bolivian government ordered Spain’s BBVA and Switzerland’s Zurich to hand over state-owned shares they were managing in three energy companies, worth $1.5bn. This followed a period of non-co-operation by the companies involved. These energy companies are Andina SA, a subsidiary of Repsol, Chaco SA, owned by BP and BG (the former British Gas) and Transredes, owned by Shell. Both BBVA and Zurich had resisted the Bolivian government, shamelessly demanding compensation for assets they did not own. Now they are threatening legal action. Petroleos de Venezuela meanwhile has promised to invest $1.5 billion in support of YPFB. The confrontation continues.
Robert Clough
FRFI 191 June /July 2006
