Revolution in the Andes

Evo Morales went for a characteristically theatrical gesture on May Day when he sent in troops to seize Bolivia’s natural gas fields, pipelines and refineries. As global energy companies struggle to digest the consequences, it is clear that the president of Latin America’s highest, poorest and most isolated country intends to keep on trying to redistribute the region’s wealth. It is less clear how far he is likely to succeed.

Morales’s nationalisation coup followed a meeting with Cuba’s Fidel Castro and Venezuela’s Hugo Chavez, splashing happily in the ”pink tide” that is lapping away at United States influence. To underline the point, they signed a ”People’s Trade Agreement” to try to counter attempts by Washington to bolster its plan for a ”Free Trade Area of the Americas”.

Morales, a former coca farmer and the continent’s first indigenous president, pledged last year to become ”George Bush’s worst nightmare” and to end what he called ”the pillage of our natural resources by foreign companies”. His move is another example of what is dubbed ”oil nationalism”, as practised by Chavez in Caracas and Vladimir Putin in Moscow. Ecuador is making similar moves. British Finance Minister Gordon Brown has raised taxes on North Sea oil and gas too.

But the case for a leftist surge across Latin America can be overstated; Colombia and Peru are striking bilateral trade deals with the US, while Uruguay and Paraguay are unhappy with Mercosur, the Brazil-dominated Latin American common market, and considering making their own agreements with Washington.

Low-key responses to the announcement that foreign companies have six months to hand over majority control suggests the move is designed to secure better terms rather than drive them away.

”It is a symbolic message of sovereignty,” said Larry Birns of the Washington-based Council on Hemispheric Affairs. ”The very fact that Morales sent troops in, he was heightening the sense of urgency and dash. He is reaffirming his commitment to the indigenous community … This could be a manoeuvring position to raise taxes and royalties, but it’s a rather bold demand.”

Bolivia, landlocked as well as desperately poor, must avoid endangering exports, especially through Brazil-, whose state-owned corporation Petrobras is the biggest single investor in Bolivian energy. The Brazilian President, Luis Inacio Lula da Silva — a more market-friendly leftwinger — is unhappy with Morales.

Still, Bolivia’s natural resources are highly sensitive political issues; protests over gas have brought down two previous presidents.

Now investors are concerned that the new arrangements may leave foreign operations in the country economically unviable. Repsol, the Spanish energy company which has about 18% of its hydrocarbon reserves in Bolivia, was already scaling back its growth forecasts.

Economic nationalists, even those elected by what Morales has called ”the most disdained and discriminated against”, have to think through the full consequences of their actions. — Â

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