Bolivia moves towards energy nationalisation

The unilateral renegotiation of multinationals’ gas concessions in Bolivia is another slap in the face for imperialist interests in Latin America

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Proletarian writers

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On 1 May 2006, Bolivia’s newly-elected and hugely popular president, Evo Morales, delivered on one of his central election promises, announcing that the Bolivian energy industry would be placed entirely under state control. He declared: “the pillage of our natural resources by foreign countries is over”. All foreign energy companies operating in Bolivia (the main ones being Petrobras (Brazil), Repsol (Spain), Total (France), BP and British Gas) were ordered to turn their production over to the state-run oil company, Yacimientos Petroliferos Fiscale Bolivianos (YPFB).

Morales made it clear that the foreign firms that dominate the exploitation of Bolivia’s energy resources would not be compensated in respect of the loss of their old, favourable concessions now being brought under state control. He further made clear that there would be no backtracking on this move: “We don’t have to talk, dialogue or negotiate when it comes to the policy of a sovereign state.” (Cited in the Financial Times of 12 May)

The reader should note that this is not a complete nationalisation, in the sense that the foreign energy firms are not being expelled and indeed will still be able to make a handsome profit from their involvement with Bolivian gas and oil. However, their role will be reduced to a purely operational one, and control of the industry will belong entirely to the YPFB. The concessions being enjoyed by the multinationals will of course be dramatically cut, their stranglehold of the industry will be broken and they will be prevented from engaging in the type of abuses which they have perpetrated in the past, such as violating Bolivian laws and refusing to pay tax.

Government officials were keen to point out that foreign energy firms would still be able to make a decent profit out of Bolivian gas and oil, just not the outrageous profits they had been making previously. All foreign energy firms with current contracts in Bolivia have been given six months to agree new contracts with the YPFB. If they fail to do so, they will have to leave the country. In the intervening period, Bolivia will keep 82 percent of energy profits from the two largest gas fields (considerably higher than the 50 percent it has been receiving up until now, and vastly higher than the pitiful sums reaching the people of Bolivia under the stooge government of Carlos Mesa) and 60 percent from other fields. Although the details of the contracts will be worked out on a case-by-case basis, it is expected that foreign energy firms will be obliged to sell at least 51 percent of their holdings to the Bolivian government.

The Bolivian government has stated that all existing supply agreements will be met.

Imperialist response

Naturally, the imperialist world is up in arms over such an impertinent attack on the profits to which it considers it has a birthright. The Times, in a leading article on 3 May, described the nationalisation as “a gesture as childish as it eye-catching” , saying: “Some Bolivians may cheer this petulant display of nationalism; most will find that all Señor Morales has done is to anger his neighbours, undermine foreign confidence, cripple a vital industry and set back Bolivia’s development by ten years or so.” (‘Outdated petulance’)

Tony Blair, in response to impassioned speeches by Morales and Chávez at the recent summit of Latin American, Caribbean and European leaders, said: “What countries do in their energy policy when they are energy producers like Bolivia and Venezuela matters enormously to all of us. My only plea is that people exercise the power they have got in this regard responsibly for the whole of the international community … people are worried about energy supply in the future.” At the same summit, Wolfgang Schuessel, the Austrian chancellor, gave advice to Bolivia and Venezuela in the form of the following rather desperate plea for neo-liberalism: “There are always two possibilities in life. Either you want to open your markets or you don’t want to open your markets – it’s your choice. But the reality is … open market societies are better in their performance than closed, restricted structures.”

Various economic analysts from across the imperialist world have predicted doom and gloom for Bolivia, hiding their concern for imperialist profits with crocodile tears over potential job losses for Bolivian workers.

Not just gas and oil

Hundreds of years of colonialism and neo-colonialism have left Bolivia the poorest country in South America, with two-thirds of its population (of around 9 million) living in poverty. However, as with so many terribly poor countries, Bolivia is the home to tremendous natural wealth, with the second largest energy reserves in South America (after Venezuela). It also has large deposits of iron and magnesium – some industry sources estimate that as much as 75 percent of the world’s reserves of these two important metals may be contained in the ore field at El Muton, close to the Brazilian border. The Bolivian government has made it clear that this drive towards nationalisation will not end with energy resources.

The Financial Times of 16 May reported that underexploited mining concessions were next on the list in Morales’ drive to repatriate the profits being made from exploiting Bolivia’s natural resources. The new president is quoted as saying: “There are mining concessions that have only been paper concessions because actual investment was never carried out. But there are also some where the land is being mined and jobs are being created, and those will be respected.” (Cited in ‘Morales to target under-used mining concessions’)

Business News Americas of 19 May quoted Morales as calling for “the nationalisation of all natural resources, including water, and the possible nationalisation of infrastructure such as railroads and airports”. (

Interestingly, airport workers in Bolivia have recently been on strike demanding that the airports be nationalised and that the corruption and bureaucracy that characterises their current operation be stopped.

In a news conference at the recent summit of Latin American, Caribbean and European leaders, Morales said: “We’re not going to limit ourselves to oil resources. There is also a huge land ownership, especially unproductive land, in our country.” (Cited in Financial Times, 12 May)

Good reason to be confident

The leading bourgeois economists have been furiously scribbling condemnations of these bold moves by Morales and his Movement for Socialism (MAS) party, filling the lines of the business sections of the world’s newspapers with pessimistic predictions for Bolivia’s economy. They claim that Bolivia will lose jobs and markets as a result of its nationalisation process; that potential investors and trading partners will be put off and the economy will collapse.

One factor that has been widely ignored, however, is the increasing level of cooperation between anti-imperialist governments in Latin America, particularly between Bolivia, Venezuela and Cuba. Indeed, only two days before announcing the energy resources nationalisation plan, Morales was in Havana, along with Fidel Castro and Hugo Chávez, signing up to the Bolivarian Alternative for the Americas (ALBA) programme, a project set up by Cuba and Venezuela in 2004 to promote political, social and economic cooperation between Latin American countries.

The first act of this programme was the celebrated exchange of Cuba’s extensive medical resources for Venezuelan petroleum. (Venezuela delivers about 96,000 barrels of oil per day to Cuba at very favourable prices, and Cuba has sent 20,000 medical staff and thousands of teachers to Venezuela’s barrios.) Workers World of 7 May reported on the success of this exchange: “Cuba has provided doctors, teachers, videos and its literacy programme to Venezuela, which has now joined Cuba in being an illiteracy-free zone. Cuba-Venezuela trade is expected to reach more than $3.5bn this year, about 40 percent higher than in 2005.” (‘Morales nationalises Bolivia’s gas and oil’ by Rebeca Toledo,

The Peoples’ Trade Agreement, a three-party agreement between Bolivia, Venezuela and Cuba, marks Bolivia’s entry into ALBA. According to Roger Burbach, in a particularly well-written article for The Guardian, “the accord is particularly favourable to Bolivia, as Cuba and Venezuela have agreed to take all of Bolivia’s soya production as well as other agricultural commodities at market prices or better. Venezuela will also ship oil to Bolivia to meet domestic shortfalls in production, while Cuba will send doctors” . (‘Morales is taking Bolivia out of the shadow of the US’, 8 May)

The Workers World article adds: “Under the ALBA agreements, Cuba has promised to send doctors and teachers to Bolivia, while Venezuela has promised to send gasoline. Venezuela will also set up a $100m fund for development programmes and a $30m fund for social projects in Bolivia. Both countries have agreed to buy all of Bolivia’s soybeans, recently left without a market after Colombia signed a free-trade pact with the US.”

Burbach points to the necessity for Bolivia of finding alternative trading partners in the light of the US capturing its markets in Colombia and Peru:

“This year, Colombia signed a so-called ’free-trade agreement’ with the US that is particularly harmful to Bolivia. Sixty percent of Bolivia’s major agricultural export, soya beans, currently goes to Colombia. The US-Colombian accord means that cheap, subsidised US grains will flood Colombia, driving out Bolivian soya.”

“Two factors compelled Morales to seize Bolivia’s national resources and to realign the country internationally: the militancy of the country’s peasant, worker and indigenous movements, and the decision of the US to foist free-trade agreements on Colombia and Peru that severely damaged Bolivian exports to other Andean nations.”

The ALBA marks an important development for the anti-imperialist movement in Latin America, as it strikes a heavy blow at the neo-colonial intentions of various imperialist countries (primarily, but certainly not solely, the US). In fact, the ‘alternative’ part of the name reflects it being an alternative model to the Fair Trade Area of the Americas (FTAA) proposal that the US tried so very hard to bludgeon Latin America into accepting. (See Proletarian issue 9: ‘US defeat at Americas summit’ for a full analysis of how this proposal was defeated.) Whilst the ALBA promotes “cooperation, solidarity, reciprocity, prosperity and respect for each country’s sovereignty” , the FTAA promotes privatisation, deregulation and liberalisation: effectively, rich pickings for the monopolies. (Periódico 26,

It is likely that the ALBA and similar treaties and programmes will continue to grow, and that the imperialist agenda in South America will continue to be undermined. With the eyes of the US focussed so closely on Middle Eastern oil, it has found it difficult to ‘keep on top of things’ in its usual fashion – ie, by orchestrating coups, undermining elections, backing would-be dictators etc. The combination of this breathing space with the huge lease of life as a result of various Cuban initiatives and the direction being taken by Venezuela (which is in a particularly powerful position as the world’s fifth-largest exporter of oil) mean that South America is very much on the move.

Daniel Ortega, leader of the Sandinistas, has stated that he will sign Nicaragua up to ALBA immediately if he is victorious in November’s presidential elections (as he is widely tipped to be). Meanwhile, it looks as though Ecuador may be moving in a similar direction, having recently incurred the wrath of the US administration by imposing a 50 percent tax on the “extraordinary profits” of foreign oil companies and revoking the operating contract of US firm Occidental, Ecuador’s biggest foreign investor. (Financial Times, 16 May)

The times they are a-changin’ in Latin America and Comrade Fidel is clearly very pleased: “These new leaders [Chávez and Morales] have emerged and they make me the happiest man in the world … Now, for the first time, there are three of us.” (BBC News Online)

We wish the Latin American people greater and greater successes in casting off the chains of superexploitation and building their future free from imperialist interference and domination.

> US defeat at Americas summit