Bolivia: Nationalization on its Knees

by Andrés Soliz Rada

April 03, 2007

Rebelión

Sometimes the efforts of oppressed peoples to liberate themselves from imperial subjugation are confronted by direct, brutal violence like that used by the CIA to overthrow Jacobo Arbenz in Guatemala in 1954 and Salvador Allende in Chile in 1973 or else by innoculating the virus of paralysis, disorientation and demoralization into the lifeblood of the movement for change as happened in Bolivia with the Revolution of 1952. The 1952 Revolution carried on calling itself revolutionary even after the US managed to abort the nationalization of the mines by blocking the installation of metal foundries, taking control of oil via the Davenport Code (1) and centralizing all official information in its embassy in La Paz .

This latter way marked the third oil nationalization (2)of May 1st 2006. The oil companies appeared to obey the measure and even "accepted" the framework contract which converted them into service providers in such a way that YPFB(3) recovered ownership, possession and absolute control of underground resources. This time around, the emasculating virus was innoculated via the "innocent" Annexe F, by means of which the Operating Contracts were changed into Shared Production Contracts. Under the Operating Contracts the oil companies would pay to carry out exploration and exploitation activities in the name of YPFB using their own means, on their own account, at their own risk.

Under Shared Production the oil companies recover the right to include the value of their participation in oil transactions, including the gas reserves associated with export markets over which they have ownership rights, which they register first in their own accounts and later in the international stock markets.

With this antecedent, Petrobras (4) announced on March 31st this year that it was signing Shared Production Contracts in La Paz which allowed it to register the value of the reserves in the stock markets. As a result, the May 1st nationalization turned into a hollow shell, with the government having to limit itself to saying that it had obtained greater income via the sale of larger volumes of oil and gas.

It proposed, without success, that the formulas of Annexe F be made known to the Senate in closed session, that is to say behind the backs of the citizenry. It paralysed the trials for crimes of smuggling, tax evasion and fraud committed by the oil companies. It went on to show the new exports to Argentina as an end in itself and not as a necessary evil with the aim of using those resources for nation building. YPFB will not control the production chain and will not be able to promote the industrialization of hydrocarbons.

Thanks to this, Bolivia now has huge difficulties obliging the oil companies to supply the domestic market at lower prices than international prices. Via the construction of huge gas pipelines it will continue exporting raw materials destined for industry in Argentina and Brazil, so the interior regions of the country will continue to lack energy resources. Nor will it be able, through the guarantee of the value of the reserves, registered in favour of the foreign oil companies, to obtain the necessary loans to promote projects capable of transforming our economy.

Could Bolivia have followed another route and faced down the monstrous power of the oil companies backed up by imperial powers like the US, Britain, France and Spain, and too by international financial institutions like the World Bank, the Inter-American Development Bank and the Andean Development Corporation as well as the hundreds of non-governmental organizations that have got themselves key positions within Evo Morales MAS (5)? Why demand more radical behaviour of the first President to call himself indigenous than that demanded of Kirchner or Lula who, in the end, lead countries far better able to resist the New World Order led by that mess of fanaticism and dementia that is George Bush? Could he have chosen a course making national interest and dignity, set down in the Nationalization Decree, prevail with only the support of the Cuban government or the government of Chavez, one of whose economic bases is the consumption of Venezuelan oil by North America?

Possibly, the answer might be negative. Evo had few choices to do anything different than what he did with the oil contracts. On the other hand, he lost the chance to do something profoundly revolutionary. That consisted in telling the country the truth which would have strengthened his moral leadership of the excluded sectors of Latin America for whom he represents hope.

By not doing so he offers a desolating spectacle in which the oil multinationals, neoliberal legislators who supported Hugo Banzer Suarez and Gonzalo Sanchez de Lozada (5), along with the leaders of MAS, call on the people to support Oil Contracts characterized by the sinister Annexe F and which, in the fundamentals, help maintain Bolivia's submission to the centres of world power.


Translation copyleft by Tortilla con Sal

Translator's notes
1. The Davenport Code was the name applied to legislation promulgated in 1956 offering concessionary terms to foreign (mostly US) oil companies. In 1969 President Alfredo Ovando Candia revoked the Davenport Code legislation. when his government nationalized Gulf Oil.
2. Shortly after Yacimientos Petrolíferos Fiscales Bolivianos was founded in 1936, General David Toro's government nationalized Standard Oil's holdings in Bolivia. The second nationalization was that of President Alfredo Ovando Candia in 1969.
3. Yacimientos Petrolíferos Fiscales Bolivianos - the State hydrocarbons company.
4. Petrobras although nominally Brazil's State oil company is owned mainly by foreign investors.
5. MAS - Movement Towards Socialism - is Evo Morales' political party.
6. Hugo Banzer Suarez, former Bolivian dictator (1971 to 1978) and also elected President (1997 to 2001). Gonzalo Sanchez de Losada was president twice from 1993 to 1997 and from 2002 until he was forced to flee the country after the 2003 uprisings against his oil and gas policies in favour of foreign multinational oil companies in which many dozens of protestors were killed by security forces.