Bolivia, energy and sovereignty

Bolivia has nationalised yet another element of its energy industry. The Bolivian government already owned 50% of this and other enterprises and sought to buy back the remainder. When agreement could not be reached on a share buy back, they simply took it.

The dilemma faced by Bolivian President, Evo Morales, is a common one in poorer nations. His country faces the same pressures faced everywhere of rising prices for many ordinary items. The profits from the energy industry are increasing and a lot of that money has been flowing out of Bolivia. Bolivia need not actually be poor at all, as it has significant energy reserves.

The privatisations of infrastructure made by the previous government were widely rejected. The World Bank had demanded Bolivia privatise infrastructure, which lead to the price of water increasing by 200% and 300% for many people. Others were charged for using water from their own wells. This prompted a revolt with riots spreading through out the country. The water privatisations were reversed. They had made things much worse for ordinary people forced to pay monopoly rents to foreign-owned water companies.

There will always be a tension between private property rights and the national interest. This tension is particularly acute in poor countries or countries where wealth (and consequent well being) is not equitably distributed. As energy issues move to the fore, I think we can expect to see more such moves by countries tired of exporting a huge chunk of the value in their resources via multi-nationals.

President Morales seems to be applying the same simple logic to his country's energy industry. He wants and needs more revenue to support the programs his government wants to put in place to help the poor of Bolivia. He is following the lead of Venezuelan President, Hugo Chavez, who has also made efforts to use his countries resource wealth to improve the circumstances of the majority who had been left out of the loop in previous decades.

The question now is how will the multi-nationals react? In the past, they have usually lobbied the US government to intervene and leaders like Morales have found themselves either dead, deposed or facing a "rebel insurgency" funded by the CIA with particular focus on blowing up or disrupting whatever is the multi-nationals wanted to control. It's a form of extortion racket. Iran, Honduras and Chile are three well documented examples. Venezuela has also been the target for US-backed coup attempt (and here) in April 2002, lead by oil executives.

Well aware of these attitudes from the gringos to the north, President Morales explained his nationalisation strategy thus:

President Morales said Ashmore had agreed to sell some of its 25% share in the firm but that these talks had not led to a deal.

"We waited patiently all month, but the actions they took were totally different," the president said.

"They wanted to be bosses, and have us be the employees. We're a small country - sometimes they call us underdeveloped - but we have lots of dignity Partners are welcome, but we will not accept bosses."