11 May 2006 Edition

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Bolivia reclaims its gasfields

Latest South American move to take control of natural resources

May 1 will be a day to remember for Bolivia. After centuries in which the country's rich, natural resources were plunderered by Spain, Britain and the US resulting in death and destruction, Bolivia's newly elected president, Evo Morales, announced his decision to privatise the country's gas fields, as he promised during his election campaign.

Morales ordered the military to immediately patrol energy fields, and for corporations to begin channelling their sales through the state-owned energy company. He also imposed a deadline of 180 days for companies to renegotiate contracts with the government. Otherwise, they will loose their commercial rights. "The time has come, the awaited day, a historic day in which Bolivia retakes absolute control of our natural resources," Morales declared. "The looting by the foreign companies has ended."

"If the negotiations do not go well, we could go to the next step- expropriation", said Andrés Soliz Rada, the energy Minister, adding that the companies would be compensated. But the first step, he said, is an audit of foreign company documents. "It's time to open the black boxes of the petroleum companies."

Morales' decision means the state would be entitled to 82% of production in the biggest fields, up from less than 18% the companies agreed to when they began developing the fields.

As a first step, auditors from oil giant Petróleos de Venezuela, visited three foreign companies in Bolivia and announced that they would be involved in the audits. The Venezuelan company is also providing technical help to Bolivian authorities and is to sign a contract to build a gas separation plant.

The latest developments put the Bolivian government's small energy auditing firm, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) firmly in the driving seat. In the new scenbario Yacimientos would become an equal partner with giants like Repsol YPF SA of Spain and Total of France. Yacimientos also would take a majority stake in three formerly state-owned by now foreign run companies- Chaco, Andina and Transredes.

Jorge Alvarado, president of the Bolivian company said: "YPFB, because of the neo-liberal model, has been reduced to a minimum. It has no economic resources. But we see that there is much interest by foreign companies that want to invest in the country."

Veiled threats and pressure on Morales to reverse his decisions came almoist immediately, with Spanish and Brazilian government officials attacking the move. Spain's prime minister, José Luis Zapatero, said it could affect the amount of assistance Madrid provided to Bolivia. However, Morales' main concern will be the reaction of the US administration, which may use attempt to force Morales to step back.

Despite being rich in natural resources, Bolivia remains the poorest country in the American continent. The Spanish took the country's silver and gold while massacring the population. British domination damaged the country's economy and future development even further. Then, at the beginning of the last century, the United States, through international finances advocated by the International Monetary Fund, the World Bank and the Inter-American Development Bank, imposed the conditions for the development of its economy on the back of Latin American countries.

Even before his election, figures in the US adminstration such as Condaleeza Rice expressed disapproval of Morales. Now Bolivia could face an unofficial boycott.

"This isn't like Saudi Arabia, which over the years has developed a know-how to dominate the industry independently," said Gal Luft, co-director of the Institute for the Analysis of Global Security, a consultancy in Washington that studies energy issues. "When you cause problems for foreign investors, you cause problems for those who know how to create and develop the industry."

The developments in Bolivia represent the latest step by Latin America governments from Venezuela to Ecuador to assert greater control over the energy sector. In April, President Hugo Chávez of Venezuela seized two oil fields operated by the Total group of France, and Ente Nazionale Idrocarburi, of Italy, because they were unwilling to give more control of their operations to Petróleos de Venezuela, the state-run energy company.


UN's top humanitarian official Jan Egeland has said it is vital that UN peacekeepers are allowed into Sudan's Darfur region to help end the humanitarian crisis. Speaking from Darfur, he warned there was a sea of militias in the region and without security the humanitarian work could not succeed. Egeland is in Darfur, in western Sudan, to assess conditions there and in refugee camps in neighbouring Chad. An agreement between the government and a key rebel group was signed on Friday 5 May.


The United States has announced it is prepared to bring a UN resolution on Iran's nuclear program to a vote, with or without Russia and China's support, but was still seeking to bridge differences and win unanimous Security Council approval.

After an informal meeting at Britain's UN Mission, council members said they made progress in a paragraph-by-paragraph discussion of the draft resolution. The resolution, co-sponsored by Britain and France and backed by the US, would make mandatory the previous Security Council demands that Iran suspend uranium enrichment, plutonium reprocessing, and construction of a heavy-water nuclear reactor.


The US Senate Armed Services Committee called on Thursday 4 May for a legal definition of inhumane treatment of military detainees as it pressed the Bush administration to comply with a law banning mistreatment of such prisoners.

The committee called for a legal opinion from federal departments to pin the administration down on its treatment of prisoners at Guantanamo Bay and other suspects as lawmakers cleared a $517.7 billion defence authorisation bill.

The measure is seeking the administration's stance on whether techniques such as forcing an inmate to wear women's underwear or simulating the sensation of drowning, complied with the law passed last year barring cruel, inhuman or degrading treatment of prisoners.

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