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On Bolivia's Gas Nationalization

By Aleksander Boyd

London 03.05.06 | There's a big fuss in the news about the move by Bolivia's President Evo Morales to nationalize the oil and gas in his country. The Spanish and the Brazilians are meant to be up in arms due to this 'sudden' action. Repsol stocks fell in Spain's IBEX, whilst Rodriguez Zapatero expressed concerns to Bolivian charge d'affairs Álvaro del Pozo. On the other hand Petrobras' shares weren't affected; Lula calmed local critics by saying that Morales' move won't cause any disruptions or rationing of gas in Brazil; Assemblymen from his Workers Party defended Bolivia's rights to its natural resources and expressed willingness to engage in constructive dialogue with Morales' government. In the meanwhile Hugo Chavez did not miss the chance to remind the Spanish Premier that Morales "knows what he's doing."

To be frank I don't understand this reaction. To those that have bothered to ask me for impressions all I can say is, what else were you expecting? Mind you Evo Morales, out of the Bolivarian gang of the Three Musketeers, is the weakest link. That much is certain. It is also true that he's following the chavista booklet: i.e. win the presidency, purge institutions whilst waiting on the National Constituent Assembly that will do away with all elected powers, govern by decree, shred contracts... How can anyone be surprised, we have seen this movie before, haven't we?

In sum it seems to me that most Europeans and Americans commenting on this issue are just too naďve, too stupid or they haven't been paying attention at South America's developments since Chavez took power in 1998, or perhaps there's collective suffering from ADD. Have observers already forgotten the recent expropriations of ENI and Total in Venezuela? And the forceful migration to new contracts? What's happening in Bolivia is in no way different from what the Venezuelan caudillo is doing/has done, and as Morales is but the junior of the gang, all foreign investors and analysts have to do is to study Chavez's take over plan to learn what's in store for them.

As the FT rightly put it:

"The current paladin of Latino populism is Hugo Chávez of Venezuela, on whom Mr Morales models himself... The mercurial Mr Chávez is demanding that foreign oil companies sign new contracts increasing the state’s share of revenues. Again, nothing wrong with that so long as it stays within the rule of law. The problem is that caudillos such as Mr Chávez have little time for the law and checks and balances, and tend to skew their economies between patronage and concessionary or crony capitalism. While they do sometimes spend resources revenues on the poor, in per capita economic growth and wealth distribution, the Venezuelas and Argentinas are abject failures."

Do not miss the next episode though, featuring Ollanta Humala.

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