LA PAZ – If the new president’s choice for energy minister is an indication,
the multinational corporations that in recent years have made a lot of money extracting Bolivia’s natural gas are likely to be stung by the promised “nationalization” of the country’s mineral wealth.
Evo Morales, the socialist sworn in Sunday as Bolivia’s first-ever Indian president, has said his determination to recover state ownership of gas and oil does not mean the foreign companies will be subjected to expropriation or confiscation.
But his choice of journalist, attorney and former leftist Congressman Andrés Soliz Rada as hydrocarbons minister might give the oil-company capitalists pause.
The 66-year-old Soliz Rada has been one of the harshest critics of the foreign energy companies that invested in Bolivia, and he can be considered a member of the hardline group in Morales’s Cabinet when it comes time to negotiate with the multinationals.
After being sworn in this week, along with 15 other ministers, Soliz Rada said the nationalization to be undertaken by the new administration was still under study and the president himself would explain it in coming days.
The new minister worked as a journalist for international news agencies and media companies, was executive secretary of the Bolivian Federation of Press Workers and served as vice president of the Latin American Federation of Journalists.
He lived in exile during the 1970s military dictatorships and was elected a deputy and senator between 1989 and 1997 while a member of the defunct Conscience of the Nation party, a populist political organization.
Soliz Rada was the ideologue for Conscience of the Nation, which sought to defend Bolvia’s natural resources and sent Remedio Loza, an Indian woman, to Congress.
The new minister clashed with former President Gonzalo Sánchez de Lozada and accused him of corruption in the controversial book “The President’s Fortune.”
Soliz Rada recalled the clashes with the former president, who governed Bolvia from 1993 to 1997, in comments this week about his political career, and he reiterated that one of his goals in the new administration was to get legislation on the books that would open the way for investigations of fortunes accumulated in the Andean nation, an issue he has fought for over the course of many years.
When he was president, “I told Sánchez de Lozada: Sir, you are corrupt and a crook,” Soliz Rada said, adding that based on his stance on this subject one could judge whether his “hand is going to tremble or not” when the time comes to demand that the energy companies comply with the Hydrocarbons Law.
The new minister said negotiations with the energy companies would take place “one by one,” because each case was different. He said he would not acknowledge the Bolivian Hydrocarbons Association, the industry trade group and until now a powerful lobby, as an intermediary in the talks.
Soliz Rada, moreover, is an outspoken admirer of leftist Venezuelan President Hugo Chávez, who he greeted as “commander,” and his plan to create Petrosur, an association of South America’s state-owned oil companies.
Soliz Rada vowed to work with an independent negotiating team that was free of pressure from the oil companies.
He said he would also scrap a rule that he considers unethical because it allows the companies to pay for the activities of some officials, including travel.
The energy industry reforms planned by Morales will be accompanied by an upward revision in the taxes currently paid by the companies that have recovered their investments.
Morales insists that national “ownership” of the gas wealth is crucial to overcoming the crushing poverty that afflicts 63 percent of Bolivia’s 9.4 million people.
On his pre-inaugural tour of 10 nations on four continents, the Aymara Indian leader reaffirmed his plan to carry out what would be the third nationalization of the oil industry in Bolivian history, while telling foreign firms that they “have nothing to fear.”
He said Bolivia “wants partners and not bosses,” but soon will have to explain how he means to reach such an arrangement without scaring off investors.
Under a law enacted in spring 2005, Bolivia’s levies on firms rose from some of the lowest in the world to a cumulative 50 percent, and Morales’s team wants to apply an even higher rate to companies that have already fully recouped their initial investment.
The Socialists also want significant revisions to the contracts the multinationals signed with the conservative Bolivian government that privatized the sector in the 1990s, and they want the state to take an active role in developing a domestic industry to process natural gas into products with bigger margins, such as clean-burning diesel fuel.
Uncertainty about the future rules of the game is already having an impact.
Preliminary figures show that Bolivia received only $130 million in foreign direct investment last year, compared with $608 million in 1998, at the height of the privatization process.
Bolivia has an estimated 48 trillion cubic feet of natural gas, giving it the second-largest reserves in South America after Venezuela.
The Andean nation’s two previous experiences with nationalization came under markedly different circumstances. On both of those occasions, Bolivia’s natural gas was under the control of a single foreign company, whereas now nearly a dozen firms are extracting the country’s hydrocarbons.
In 1937, in the first action of its kind in South America, La Paz booted out Standard Oil, then the world’s most powerful oil company, while the 1969 nationalization affected the Gulf Oil Company.
Some radical groups in Bolivia look back with nostalgia on the expulsions of those giant foreign concerns and would like to see the same thing done to the multinationals that now dominate the energy sector.
Morales, however, rejects that option and so must face the difficult and tricky task of keeping the multinationals on board as he asserts state ownership over Bolivia’s main natural resource. EFE