Bolivian voters back president on gas industry nationalization

Jul 18, 2004 02:00 AM

Bolivians voting in a referendum overwhelmingly supported President Carlos Mesa's plan for the government to exert greater control over US and other foreign gas companies.
With 66.4 % of the vote sampled by the government, 87 % of voters approved of a referendum measure that would repeal a 1996 law that permitted foreign energy companies to exploit Bolivia's vast and virtually untapped natural gas reserves. In addition, 92 % supported a proposal for Bolivia to take back ownership of natural gas at the wellhead, meaning oil companies would be paid for pumping the oil but would not own it. The changes would need legislative approval.
"Today the mandate from the people is for a strong state," Mesa said, telling Bolivians a new economic era was beginning.

Until now, Bolivia has followed US-backed economic policies favouring open markets and little government regulation of business. Although voting was mandatory, it appeared that nearly 42 % of voters stayed away. Opponents of Mesa's plan were likely to counter the high support by noting that so many Bolivians did not vote.
Mesa has said he will honour prior contracts reached with US and other foreign gas companies. But with the weight of a referendum behind him, he will have some leverage in asking oil companies to reconsider their contracts.

There are not many precedents for Bolivia's expected move against the gas sector, and Mesa insists he will not replicate Mexico's 1938 expropriation of US oil companies or Chile's 1971 takeover of US-owned copper mines. But many voters seemed to think they were voting for an immediate seizure of foreign companies, as both political parties on the left and right are demanding.
"Nationalization is good. I think the state must run things," said Cristina Machaca, 32, a poor farmer in El Alto, the rough slums perched above the administrative capital of La Paz. Energy industry executives feared radical groups might try to seize gas facilities in coming days and were ratcheting down production.

Bolivia sits atop at least 52.3 tcf of certified but largely untouched natural gas reserves -- about the size of reserves of much-larger Canada. Bolivians, who have an average per capita annual income of just $ 953, remain divided on how to exploit the nation's vast, untapped wealth. In the gas-rich southeast, the referendum is viewed as a move on regional wealth. In the western highlands, home to most native Bolivians who are a majority and profoundly distrust foreign companies, there are demands for immediate expropriation without compensation.
With support from the United States, Bolivia opened up the gas sector to foreign investors in 1996, and more than $ 2 bn in foreign direct investment followed. Mesa wants to change the rules of the game to ensure Bolivia has greater control and benefit. He proposes reforming the state oil company to have it, and not the private sector, direct development of Bolivia's gas sector. He also proposes raising royalties collected from gas companies to 50 % from the current 18 %.

Mesa told that within days he will ask congress to revoke the hydrocarbons law which, at the time, attracted multinational giants such as Shell, British Petroleum, Amoco, Enron and others. He also will send congress new proposals for regulating the sector.
"I'm very optimistic," he said as he toured voting stations in the slums above La Paz, the scene of violence last year that brought down President Gonzalo Sanchez de Lozada and left at least 59 dead.
The violence was sparked by a plan to export natural gas to Southern California through Chile, which seized now-landlocked Bolivia's coastline in 1880. Mesa, a historian and ceremonial, party-less vice president, assumed the presidency by constitutional succession. Rumours forced top military commanders to publicly declare that they were not plotting a coup to thwart the referendum. Bolivia has seen 191 changes of government in its 178 years as a republic. There was a small explosion in the city of Achacachi, but voting was otherwise trouble-free.

The absence of violence and large voter turnout strengthen Mesa's hand in dealing with the powerful gas sector and an unruly congress that is largely discredited in the eyes of voters.
"The people are deciding and congress should hear us," said labourer Feliciano Catari, 45, who said he supports Mesa's plan requiring congressional approval. "If they don't listen, the people will take other measures."
"People have clearly supported democracy," said Marcelo Varnoux, a political analyst in La Paz. "It strengthens the president's position and gives him oxygen, more flexibility against the radicals, congress and the business powers."

Bolivia's president is traditionally selected by congressional vote, and voters seemed grateful to have a voice in national matters. They shouted "Bravo" and applauded as Mesa travelled the country by plane to inspect voting stations.
Waldo Alberracain, Bolivia's independent human rights ombudsman, warned in an interview that if congress failed to hear the voice of voters it could spell trouble.
"The absence of national dialogue, if not restored, could dismember the country," he said.

Source: Knight Ridder
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