Bolivian Gas Nationalization Under Threat

To address the growing row over price hikes Bolivia had demanded for the natural gas it exports to Brazil, President Evo Morales (left) traveled to the Planalto palace in Brasilia in February to speak with his Brazilian counterpart Luiz Inácio Lula da Silva. (Photo: Jose Paulo Lacerda / AFP-Getty Images)

For the fourth time during his 14-month government, Bolivian President Evo Morales swore in a new president to run state petroleum company Y.P.F.B. on March 23. This followed the eruption of a scandal that has cast doubts on the government's most popular measure to date—the nationalization of the country's gas resources.

"The errors are ours, the successes belong to the people," Morales said as a new chapter in the gas nationalization process opened with Guillermo Aruquipa Copa at the reigns of Y.P.F.B. "With each day that passes I am much more convinced that guaranteeing these profound transformations has its costs."

At the center of the turmoil are 44 contracts signed by the Bolivian government with 12 gas transnational companies that the Bolivian Senate approved on Nov. 28 despite many government senators admitting they had not read the documents. The final contracts—which had to be completed within a six-month deadline set by the nationalization decree enacted in May—were complete only hours before the deadline.

The six-month period was filled with intense negotiations that cost the government its first minister, Andres Soliz Rada, who until September had been hydrocarbons minister. Many identified Soliz Rada as among the "hardliners" in the government. He resigned after pressure was brought to bear on the government by Brazilian-owned Petrobras—one of the largest investors in Bolivia—which pushed the government to annul a ministerial resolution that would have placed all control of prices and commercialization of gas into the hands of Y.P.F.B. In response to the annulment, Soliz Rada resigned.

Hoping to make the nationalization decree a dead letter, the transnational companies kept up their pressure, threatening to pull out of Bolivia. Only after one of the transnational companies agreed to sign a contract two days before the deadline did the rest of the companies follow suit.

It has been revealed that negotiations continued beyond the deadline, including the softening of one of the annexes that determined "recoverable costs," impacting on how much companies would have to pay in taxes. These negotiations—headed by Manuel Morales Olivera, who later became president of Y.P.F.B. before being forced out during the scandal—were carried out behind the backs of then president of Y.P.F.B., Juan Carlos Ortiz, and hydrocarbons minister Carlos Villegas.

The contracts were passed by the Senate when two alternate senators (who can sit in place of a regular senator if they're not available) broke an opposition boycott and allowed quorum to be reached in the opposition-dominated Congress. The only problem was that they were the wrong contracts.

Using their majority, and their control over the mass media, the opposition has blocked the passing of the real contracts, launching a scathing attack on the Movement Toward Socialism (MAS) government for causing "economic damage to the state."

Speaking in the Senate, Soliz Rada said that those in the opposition party PODEMOS, such as former president Jorge "Tuto" Quiroga, had no ground to stand on when calling into question the contracts, as they had presided over some of the most intense looting of the country's natural resources.

Recognizing that "the opening of the government of President Evo Morales has a strong popular content, a recuperation of the excluded and marginalized sectors of society," Soliz Rada, however, argued that the contracts signaled a shift away from the initial spirit of the nationalization decree.

In particular, he pointed to lack of clarity in the contracts as to whether the transnational companies could record Bolivia's gas reserves as theirs on the stock exchange. Recording the reserves as belonging to Y.P.F.B. on the stock exchange would provide substantial funding for industrialization and the construction of gas ducts to supply the domestic market.

According to Soliz Rada, the contracts should be renegotiated because Y.P.F.B.'s directorate did not approve them, as required by law. "For me the problem deep down is what will happen to the national economy," which is predominately based on hydrocarbons, he explained.

"I do not reproach the government for the contracts that are signed," he said, but added that in the face of pressure coming from the transnational companies he would have acted differently and "told the country the truth … what you cannot do is do something wrong and then say we have done the best in the world."

The Cochabamba-based Democracy Center's Aaron Luoma pointed out that "implementing the government's nationalization policy," which would result in state income from gas increasing from $200 million annually to $1,200 million, "is no easy task."

Luoma's March 26 report quotes Villegas as saying: "We've got to turn a ministry that before only served to sign papers into a body that can design energy policy … We've got to turn a state company used to only rubber-stamped contracts into the main operator of a huge industry."

Luoma noted: "In testimony before the Senate last week, former Y.P.F.B. president Ortiz said the motive for his January resignation was the constant destabilization and sabotage carried out by government officials who started an 'information war' against him after he called attention to the errors in the October contracts. Such in-fighting does not bode well for Y.P.F.B.'s prospects of building a cohesive oil and gas management team that is fully capable of leading the development of Bolivia's oil and gas resources."

These problems are true not just in the hydrocarbon sector, but in all fields where the Morales government is forced to deal with both the capitalist state bureaucracy and the corruption within the MAS that in the last few weeks has seen the MAS expel at least three of its leaders and demand that parliamentary deputy Nemesia Achacollo and Senator Lino Villca relinquish their parliamentary immunity in order to face an investigation over the selling of public service jobs.

From Green Left Weekly.