home > by publication type > daily analysis > Vying Claims on Bolivia's Energy
Email
| Author: | Lee Hudson Teslik |
|---|
Corporations had their assets seized by Bolivia's military. (Photo: AP)
Evo Morales, a former coca farmer who rose to Bolivia's presidency in December 2005 on a socialist, anti-American platform, has fulfilled a much-publicized campaign promise by nationalizing the country's oil and gas operations (Bloomberg). During a summit between Latin American and EU leaders in Vienna, Morales said that other nations' "pillaging" of Bolivia would come to an end (Reuters). He has swatted away international criticism from European governments with corporate interests in Bolivia's gas resources, which are the second most abundant in the region. Companies from Spain, France, and England have invested more than $3 billion (Der Spiegel) in Bolivia over the last decade, but their assets were seized by the country's army on May 1, Morales' hundredth day in office.
Some of Bolivia's Latin American neighbors, which also have significant interests in the country's energy resources, have shied away from condemning Morales. Following talks with Bolivian leaders, Presidents Luiz Inacio Lula da Silva of Brazil and Nestor Kirchner of Argentina promised to respect Morales' decision (BusinessWeek). Despite being the biggest economy in Latin America, Brazil found itself reacting to an agenda set by Bolivia (FT), the region's poorest nation, during the economic summit in Vienna. Nationalization will likely mean a hike in the price of Brazil's gas imports from Bolivia, where Brazil has some $1.5 billion in assets; the complicated relationship between the countries is examined in this new CFR Background Q&A. There are also concerns that Bolivia will impose restrictions so severe that foreign energy companies, miffed as they are with Morales, will simply leave Bolivia to manage its own energy facilities, which the country hasn't done in years. This could have devastating economic consequences (WSJ) for the Andean nation. But Morales has announced that he and Venezuela's populist President Hugo Chávez will meet May 18 in Chapare, Bolivia's coca-growing region, to potentially sign accords between the two country's state-owned gas companies (MarketWatch) so that Venezuela may assist Bolivia to industrialize its resources.
More broadly, the nationalization debate takes place in a region struggling for its political identity. This is a year of elections in Latin America (BBC), and in many countries the political pendulum seems to be swinging away from conservative elites. But experts warn against the simple characterization of a "left-leaning" region. In this month's Foreign Affairs, Jorge Castañeda, Mexico's former foreign minister, distinguishes between strains of "modern" socialism and "old-fashioned, strident" populism, both of which he sees as emergent. Nor are all countries in the region leaning left. The next major elections in the region are in Colombia, where the conservative incumbent Alvaro Uribe holds a commanding lead.
Still, the fallout from Bolivia's energy nationalization will be closely watched for signs of broader impact. It is not the first move toward nationalization in the region. Chávez has steadily expanded state ownership of foreign-run oil fields (CSMonitor), and one of two contenders in a runoff for Peru's presidency, Ollanta Humala, is campaigning on a nationalist, populist ticket. Experts credit resurgent nationalism and protectionism not to ideology so much as to the failure of traditional institutions to meet basic needs of the people. This 2005 World Bank report confirms that poverty remains rampant, particularly in the Andean countries, despite an influx of foreign investment. Until these structural problems are resolved, agitation for change is likely to persist.
Weigh in on this issue by emailing CFR.org.
Explore international efforts to curb nuclear proliferation with a new interactive from CFR's program on International Institutions and Global Governance.
To order Task Force reports, Council Special Reports, and Critical Policy Choices, please call, fax, or order online from our distributor, the Brookings Institution Press: phone +1.800.537.5487, fax +1.410.516.6998.
For information on other reports that are not for sale, or for general publications information, please call +1.212.434.9516 or email publications@cfr.org.
In War of Necessity, War of Choice, Richard N. Haass contrasts the decisions that shaped the conduct of two wars between the United States and Iraq involving the two presidents Bush and Saddam Hussein, and writes an authoritative, personal account of how U.S. foreign policy is made, what it should seek, and how it should be pursued.
In Cuba: What Everyone Needs to Know, Julia E. Sweig presents a remarkably accessible portrait of Cuba’s unique place on the world stage over the past fifty years, including its internal politics, its often fraught relationship with the United States, and its shifting relationship with the global community.
As Ray Takeyh shows in Guardians of the Revolution, behind the famous personalities and extremist slogans of Iran is a nation that is far more pragmatic—and complex—than many in the West have been led to believe.
Complete list of CFR Books
This report finds that nuclear weapons will remain a fundamental element of U.S. national security in the near term, and makes recommendations on how to ensure the safety, security, and reliability of the U.S. deterrent nuclear force, prevent nuclear terrorism, and strengthen the nuclear nonproliferation regime.
About Independent Task Forces at CFR
Complete list of Task Force reports
The Canadian oil sands present an important challenge to policymakers: they promise energy security benefits but present climate change problems. Michael A. Levi assesses the energy security and climate change effects of the oil sands and makes recommendations for U.S. policymakers within the context of broader bilateral relations with Canada.
This report explores an important element of the maritime policy regime: the United Nations Convention on the Law of the Sea. Author Scott G. Borgerson examines the international negotiations that led to the convention, the history of debates in the United States over whether to join it, and the strategic importance of the oceans for U.S. foreign policy today.
Complete list of Council Special Reports
To request permission to reprint or reuse CFR material, please fill out this permissions request form (PDF), referring to the instructions on page 1.
Copyright 2009 by the Council on Foreign Relations. All Rights Reserved.
