Sunday, April 29, 2007

Nationalization's Growing Pains

After months of negotiations, the Bolivian government’s successful settlement of oil and gas contracts has been overshadowed by citizen protests in different departments of the country. In April, citizen disputes erupted over the spoils of two of Bolivia’s greatest exports - gas and tin - but each with mixed results.

Most recently in the Chuquisaca department, about 4,000 Huanuni miners stormed the Constituent Court building located in the city of Sucre. The cooperative miners are dissatisfied with government decree 28901 that gives Bolivia’s state-owned mining corporation, COMIBOL, exclusive control of the Posokoni tin deposits in Huanuni.

Miners claim that the law is unconstitutional and attacked the building after judges refused to discuss the government’s nationalization plan with mining leaders. It is the first major situation for new Mining Minister Luis Alberto Echazú. Two police officers were wounded, but the protests mostly resulted in property damage. It illustrated the fragility of a truce between the Morales government and certain elements of the mining sector that ensued after
violent clashes left 17 dead in October 2006.

Just one week earlier, days of protests at gas installations in southern Bolivia, left one dead and 11 injured as thousands of protesters blocked natural gas installations in the Bolivian border town of Yacuiba on April 17.

The government sent hundreds of troops to the scene to retake control of a natural gas pipeline to Argentina run by Transredes - the Bolivian subsidiary of Royal Dutch Shell. The army removed dozens of protesters while hundreds of other protestors gathered 30 miles away outside the San Alberto natural gas field, run by Brazil's Petrobras. After a demonstrator was shot and killed, 47 police officers were held hostage in Yacuiba municipal offices for more than 20 hours before their release was negotiated.
The Permanent Assembly for Human Rights of Bolivia (APDHB) was called in to mediate the dispute as the government appealed for calm and invited protesters to a meeting in La Paz. APDGB's Víctor Farfán told IPS: "The gas field in dispute belongs to Bolivia and should not trigger clashes between brothers and sisters." President Morales urged the people in the region not to fight over money.
The activities in Bolivia‘s southeastern state of Tarija stem from a three-year boundary dispute between two neighboring provinces of Gran Chaco and O’Connor. Both districts are wrestling for a share of state revenue from one of the country's largest natural gas fields. The Margarita field is not yet operational but is believed to contain 20 per cent of Bolivia's proven and probable natural gas reserves - holding some 10.5 trillion cubic feet of natural gas. Each district is seeking control over Margarita, whose future royalties could generate some $100 million a year in taxes.

Repsol YPF holds a majority stake in the Margarita field, while Britain’s BG Group and Argentina’s Pan American Energy each have a minority interest. They all operate in partnership with the state-owned YPFB and have not been fully taken over even after Morales' efforts to nationalize the hydrocarbon sector.

Gas-rich southern Tarija, which is located on the border with Argentina, is home to 85 percent of the country's natural gas reserves, and Spain's Repsol YPF and France's Total also operate natural gas fields there. Brazil imports about 26 million cubic meters of natural gas from Gran Chaco every day.

Despite the protests, the flow of natural gas exports was not cut but needed to be slowed in order to correct technical problems. According to the Bolivian government it was necessary to reduce its natural gas exports to Argentina by about 75 percent and decrease shipments to the Brazilian cities of Sao Paulo and Santos by 10 percent. It is estimated that the protests cost the country $1 million a day in revenue.

The government blamed Tarija’s governor, Mario Cossío, for provoking the situation. Tarija is one of the four autonomist departments and Cossío - a member of the opposition Nationalist Revolutionary Movement - accused the government of exploiting the conflict to undermine his position.

In a meeting held in La Paz on April 23 with Vice-President Alvaro García Linera, Cossio as well as mayors, legislators and civic committee members from both provinces signed a document pledging to abide by the eventual legal ruling on the border. A second meeting is scheduled for May 18.

The events in Chuquisaca and Tarija are just the latest citizen actions that have occurred since Morales assumed the presidency almost 15 months ago. In the past, Bolivians have demonstrated a willingness to confront the government over the exploitation of the country’s natural resources. Morales was elected on a platform of wide-spread re-nationalization, but the process is easier said than done.

It was almost a year ago that President Morales nationalized the hydrocarbon sector on May 1, 2006. Yet, the government's oil and gas contracts with foreign multinationals were still unresolved until April 19th of this year.

Previously marked by irregularities, lawmakers unanimously approved 44 new contracts that the government originally signed in October with multinational oil companies including Repsol, Petrobras, Total, BP, British Gas, and ExxonMobil. Finally Bolivia has majority control of its energy sector.

Social and labor movements have demonstrated that the art of citizen protest is alive and well in Bolivia. Natural resources and the right to benefit from their use are at the root of several citizen demonstrations, from regional autonomy to the most recent conflicts over tin and gas. The passionate protectionism that Bolivians feel for their resources can not be quelled easily - even with the popular election of an indigenous, labor leader.



Blogger John K said...

Tarija is NOT on the border of Argentina. As the condor flies, it's 50 miles; by road, it's over 150. Please check your facts before reporting them.

May 01, 2007 1:08 PM  
Blogger karahwoodward said...

Actually we were referring to the Tarija Department, which does border Argentina. A link has been added to clarify our intent.

May 07, 2007 8:13 PM  

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