Bolivian President, Evo Morales, has intensified his campaign against new indigenous protests that are heading for La Paz. The purpose of the mobilizations is, once again, demonstrate dissatisfaction with the decision of the Bolivian government to build a road on the Indian Territory Isiboro Secure National Park (Tipnis), which is an indigenous nature reserve. Trying to win support from public opinion, Morales flew along with the local and foreign journalists over Tipnis, showing the benefits of the work on this ecological reserve. The road that the government intends to build on Tipnis is designed to unite the central region of Cochabamba with the Amazon region of Beni, through half of the Tipnis population, rejects the proposal.
To resolve this impasse, Morales is in holding a referendum to be held on May 10. The vote will decide whether the indigenous will approve or not the construction of the road on Tipnis. Despite the initiatives of the Bolivian president to keep dialogue channels open and consult his primary voter base – the indigenous movement – there is strong resistances to approve the project driven by the executive branch.

The executive branch of Bolivia thinks oil companies are not necessary in the country if they do not want to abide by their investment commitments. The statement was made by the Minister of Hydrocarbons and Energy, Saúl Ávalos, in an interview given to broadcasting company Erbol. He recalled that now in Bolivia all commitments are to be fulfilled.

Ávalos said that if the companies refuse to implement their investments – US$ 900 millions for this year alone – the State will intervene to verify whether investments in the oil industry are in keeping with its projects.

The threat issued by the Ministry lands in an environment of fuel shortage affecting some regions in the country, a situation that has been caused by declining investments in the oil industry.

 On the other hand, oil companies justify lesser financial investments due to the country’s political instability in recent years, tax reforms and the nationalization carried out in mid 2006.

After several standoffs between government and opposition over the new constitution referendum, Bolivian political parties decided to form a committee to discuss and attempt to weave a consensus. The committee was announced by Bolivia’s vice-president, Álvaro García Linera. As a result, the congressional session scheduled for last Friday in which the referendum call would be voted was adjourned.

Both the chairman of the senate, Óscar Ortiz, and of the house of representatives, Edmundo Novillo, attended the meeting at which this consensus was formed. Both sides are to work relentlessly to attempt to break the many standoffs created in recent months.

Negotiations will be reviewed at every 48 hours by representatives of both sides in order to avoid recurring issues. According to Mr. Linera, the time has come for the political forces to take an accountable stance and debate their way out of the institutional crisis.

The committee will be comprised by the Movement for Socialism (MAS), the Social and Democratic Power (Podemos), the National Revolutionary Movement (MNR) and the National Union (UN).

The launch of this committee is a key initiative of Evo Morales’ government. However, the Bolivian leader has failed to demonstrate the political ability necessary to bring the crisis to an end.

Compared to the government’s stance in past negotiations, this new initiative amounts to retreat. The million dollar question is knowing whether social movements that have backed up Morales will continue to rally in support or if there will remain a pressure for the approval of the new constitution. 

The governors of Santa Cruz, Tarija, Beni and Chuquiasca decided to “temporarily” suspend dialogue with the government. They accused Evo Morales’ allies of not committing to the foundations of the negotiation process and of “hunting” citizens and leaders in their departments.

The announcement was made by the governor of Tarija, Mario Cossío. He demanded that Morales intervene and said that the future of the negotiations is “in his hands”. The opposition reacted because of the arrest of a citizen in Tarija. He was accused of taking part in attacks against pipelines and refineries.

The opposition believes that the arrest made by the Government Ministry represents a violation of constitutional rights. Cossío also mentioned that the government has not halted the blockades to Santa Cruz and has kept a media campaign in favour of the new Constitution.

This new impasse is not really new. As the conflict between government and opposition has very deep historical roots, the institutional crisis tends to continue. Up until now, because of the radical attitude by social movements supporting the Bolivian president, the Executive is unable to conduct the negotiations.

In addition, the opposition is accumulating more and more power, as it is concentrated in the richest departments. Also, the Bolivian Confederation of Private Entrepreneurs (CEPB), the nation’s biggest entrepreneurial organization, has spoken in public against the new Magna Carta. 

The US House of Representatives approved the extension of the Andean Trade Promotion and Drug Eradication Act (ATPDEA) to Colombia, Ecuador, Peru and Bolivia, despite demands by President George W. Bush that benefits to Bolivians be suspended.

The ATPDEA allows tax-free Bolivian exports into the US market. It is part of American incentives aimed at Andean nations cooperating in the war on drug trafficking.

Bush’s request to exclude any benefits to Bolivia came as a response to the expulsion of the US ambassador to La Paz, Philip Goldberg, at the summit of the institutional crisis, three weeks ago.

According to the local press, the benefits will be suspended regardless of the House approval. Sources from the US Embassy in La Paz said that the situation will not change unless the US president issues a resolution to the contrary. Faced with this imminent loss of economic benefits, the government headed by Evo Morales will probably intensify dialogue with Venezuela, Mexico and Brazil, which are all potential markets in the region. 

The dialogue between Bolivian President, Evo Morales and the governors of the Departments of Santa Cruz, Tarija, Beni, Pando and Chuquisaca advanced in a positive way. Nevertheless, the two sides did not discuss the most controversial themes. A member of Morales’s cabinet gave the information’s.

After more than six hours of negotiations, Morales left the meeting room to have lunch. He left all other members of the discussion group inside the room. According to information gathered, the dynamics of the meeting allowed both sides to explain their version of the story and to defend their points of view.

In the best terms, a true solution won`t be found. I believe the closer to a solution will be a paralysation of the crisis. This means that the conflict will not be solved, since the differences in points of view are very antagonist, but a stronger escalation will be suspended, for a while. 

Based on informations from military personnel of Brazilian President, Lula, Hugo Chavez has prepared venezuelan troops to head to Bolivia if necessary. 

Chavez is blaiming the United States for the crisis in Bolivia. The opposition movement, based on the provinces of the lowlands want more autonomy while the government in La Paz wants a higher centralization of resources and administration.

There is a military agreement between Bolivia and Venezuela, that entitles Venezuela to intervene military in the andean country if there is any deep institutional risk to President Morales or the government. 

Chavez has troops ready and prepared for a intervention at any moment. 

Source: Arko Latin America – Thiago de Aragao

Published in 2006

South America’s poorest country is back at the centre of attention in the region. Evo Morales’ historic electoral victory has signaled the onset of a government that combines indigenous nationalism and a typically Latin American left-wing populism. Bolivia has always been tightly dependent on foreign investments to compensate for its managerial ineptitude and an inability to take advantage of its own natural resources. This has fostered an influx of foreign capital which has contributed significantly to the maintenance of the country, albeit in a precarious fashion.

During Morales’ electoral campaign against Jorge Quiroga (former President and representative of the Santa Cruz business elite), the indigenous candidate, leader of coca farmers and head of the Movement Toward Socialism (“MAS”), based his agenda upon two pledges in order to secure the election.

The first was to nationalise the extraction process of Bolivian natural resources and “hand it back” to State control. This process includes natural gas and oil fields, mines, and plantations, especially of soybeans.

The second pledge was to retake the path to the Pacific Ocean, lost to Chile during the Pacific War at the end of the 19th Century. An ancient Bolivian dream, this access to the sea is the solution envisaged by Morales for Bolivia’s need to export to other countries swiftly and easily. Also worth bearing in mind is that Evo Morales’ electoral conquest was openly financed by Venezuela’s President Hugo Chávez and made relatively transparent to the media based on Chávez’s addresses to Venezuelan newspapers.

The first electoral promise was put into effect with the occupation of natural gas fields operated by Petrobras, a Brazilian company which alone invested the equivalent of 18% of Bolivia’s GDP. The occupation, marked by nationalist speeches and actions, represented an enormous defeat for Brazilian foreign policy and an immense political conquest for Venezuela’s President Hugo Chávez.

As his hand in the episode became widely known to both Latin American society and media, Chávez began to be recognised as the continent’s chief political strategist and the true regional “leader”, instead of “virtual leader” Luís Inácio Lula da Silva. Besides Petrobras’ operations, fields operated by YPF Repsol (Argentina-Spain), Total (France), and British Gas (UK) are also being targeted for Evo Morales’ nationalisation policy.

The decision of the Bolivian president may have the following impacts on Bolivia:

1. Impoverishing Bolivia’s economy, and consequently its population, due to the flight of capital backing up the internal economy;

2. Undermining foreign confidence in Bolivia during Morales’ government and any subsequent administration, in case an ideologically-aligned successor is elected;

3. Obsolescence of the technology employed in gas exploration due to lack of equipment maintenance;

4. Severance of stable relationships with the following governments: Brazil, Argentina, Paraguay and Chile.

As regards South America, Morales’ actions may lead to the following negative consequences:

1. Political turmoil in the region, causing polarisation between those supporting and those rejecting Morales’ stance;

2. Energy issues emerging from a failure to transport Bolivian gas (in Brazil, 51% of natural gas comes from Bolivia and 5.1% of Brazil’s energy grid is dependent upon Bolivian gas);

3. Economic issues emerging from a lack of gas supply in the continent. Ceramic, glass, food and beverage industries are those more heavily dependent on gas for production;

4. A lack of confidence in the region as a whole on the part of foreign investors, due to feeble responses by the main South American governments towards Morales’ breach of contracts. Such weakness may represent to investors that South American governments are unreliable and do not have the commitment to abide by their own contracts.

In order to grasp a better understanding of the scenario, it is essential to understand the previous situation, and how it has changed, for companies exploiting natural gas in Bolivia. In May 2005, the Bolivian Congress passed a bill to tax prospecting companies 32%, in addition to the current duty of 18% charged in the form of royalties. Arguing that the contracts had been closed “illegally” and in an “unfair” way, Morales’ decree of nationalisation raised duty on gas from 50% to 82%. It was also declared that companies not complying with the new regime will have to leave the country within 180 days.

In addition to this, there is another event worth noting to understand on some forecasts for the continent. A week prior to the nationalisation decree, the Bolivian President announced that his government did not have the technical capability to occupy foreign companies in order to nationalise them. However, upon fulfilling his decree, Morales made it known that the technical portion of the process would be carried out by Venezuelan specialists from PDVSA (Venezuela’s state-owned oil company).

Venezuela’s Involvement

The attitudes adopted in by the Presidents of Bolivia and Venezuela clearly show that Morales was only capable of taking such steps under the auspices of Hugo Chávez. Since taking office as President in 1998, the latter has cultivated an obsession with disseminating the thoughts of Simon Bolívar (the liberator of several South American countries in their struggles for independence) throughout the continent. Bolívar, and likewise Chávez, had dreams of a strong, united Latin America, representing a single Latin American homeland.

Owing to current oil prices on the international market, Chávez relies on a significant budget to sponsor his foreign policy. In addition to several populist measures put into effect in his homeland, the Venezuelan leader has been using the same rhetoric elsewhere in the continent. To forge an ideological coalition around this ideal, he has openly supported the electoral campaigns of certain like-minded candidates in the continent. Morales’ victory in Bolivia was the result of intense involvement by Chávez, and the same support was afforded to the losing candidate in last week’s Presidential election in Peru, nationalist candidate Ollanta Humala.

Hugo Chávez seeks to unify the continent by means of an energetic coalition, merging Venezuela’s oil and Bolivia’s gas into an expensive network of oil and gas refineries and pipelines throughout the whole continent. Part of this agenda has already been put into action with the construction of refineries in Bolivia, Argentina and Uruguay. The current scenario in Bolivia stands as a major victory for Chávez, who intends to fill the vacuum left by foreign companies as they depart Bolivia or reduce investment in the country.

Morales’ second pledge

The (partial) fulfillment of the first of Morales’ pledges raises yet more concerns with respect to the second banner of his campaign. The whole continent dreads that, incensed by the national passion of the Bolivian people and Chávez’s support, Morales will engage in a more drastic attitude while seeking to secure access to the sea.

It is very clear today that Chile will not relinquish the northern region of the country, and is thus in opposition to Bolivian intentions. However, the odds of military conflict remain low. Chile has one of the best-trained and best-equipped armies in South America, having purchased eleven F-16 fighters during the last days of Ricardo Lago’s administration, now strategically and significantly stationed at Iquique military base, 200 km from the Bolivian border. At the time of the purchase of these aircraft, the country’s Minister of Defense was current President Michelle Bachelet.

It is likely that in order to ward off tense entanglements with Chile, Morales will adopt measures even more populist in his own country to offset a failure to recover the area lost to Chile. This will imply greater involvement for Chávez, as Morales does not have the budget to carry out significant reforms.