Interior view of oil well towe
Credit: hoto Stock
Foreign Prices for Local Petroleum
By Franz Chávez
Demands have been revived in Bolivia for nationalizing a valuable natural resource: hydrocarbons.
LA PAZ, (Tierramérica).- The Bolivian government, with its hands tied by a promise to apply international prices to petroleum produced in the country by foreign corporations, agreed to support a 100-day price freeze on gasoline after the biggest protest ever by the capital's transport workers.
Maintaining the gas price at 42 cents on the dollar per liter for that period will cost this Andean nation some 10 million dollars. Bolivia possesses some of the greatest hydrocarbon resources in the region, with proven natural gas reserves of around 727 billion cubic meters, and probable reserves of a similar volume.
The government's decision came after a 24-hour strike in the La Paz passenger transport services last week, accompanied by roadblocks set up by bus drivers and others, interrupting normal daily activities in the public and private sectors.
The protest revived the demand for nationalizing the country's fossil fuels, promoted by labor unions and by the Movement Towards Socialism (MAS), headed by Evo Morales, leader of coca growers and indigenous groups, and a former presidential candidate.
The main streets of La Paz and of the central city of Cochabamba were the scenes of protests on Aug. 30, organized by Morales' party. The demonstrators demanded that President Carlos Mesa and the national Congress put the oil fields back in the hands of the state.
MAS and the unions maintain this demand following the Jul. 18 referendum in which the majority of the voters came out in favor of recovering the nation's fossil fuels from the private sector, but Mesa says Bolivia must respect its contracts with the transnational oil companies operating there, if only to avoid paying hefty reparations.
It was a binding referendum and Congress must translate its results into laws, but the vague wording of the ballot initiative has left the legislators with considerable margin for interpretation.
''President Mesa doesn't dare nationalize hydrocarbons,'' Franklin Durán, leader of the La Paz transport workers, told Tierramérica. He said the drivers will return to the streets if the gasoline price begins to climb again, even a few cents.
''There is no reason to fear the transnationals,'' said the activist, though he admits that the current government is not responsible for the conditions under which the foreign oil companies are operating.
In 1996, fossil fuel exploration and production activities were privatized by then-president Gonzalo Sánchez de Lozada, and the principal companies holding the concessions are subsidiaries of U.S., British, Spanish and Brazilian corporations.
To attract that investment -- totaling some 3.5 billion dollars -- it was agreed that international prices would be applied to the petroleum products in the Bolivian market.
Today the international price for the 159-liter barrel of crude is more than 45 dollars, and the consequences of the Bolivian agreement has been a continued rise in gasoline prices, which has taken a toll on local consumers and created a new source of social tensions.
Of Bolivia's nine million inhabitants, 71 percent live in poverty, according to official figures, and some 360,000 people do not have steady employment, says a report by the Center for Studies of Labor and Agrarian Development.
Before privatization, revenues generated by gasoline sales were the main source that the government tapped into to resolve its fiscal imbalances.
Globalization of the economy in the theoretical and ideological framework of the free market imposed as a condition -- to reduce risks for foreign capital -- international prices that attempt to create an independent business environment in the country where the investments are being made, economic analyst Vincent Gómez-García said in a Tierramérica interview.
But the main objective of the foreign companies is to take positions allowing them to dominate energy resources over the next 30 years, contrary to the free market because the beneficiaries are a handful of monopolies, he said.
Gómez-García says he supports ''sovereign decision-making power'' of the government in setting prices for the domestic market, but believes Mesa will have a hard time balancing internal social tensions with the pressures from the foreign companies.
* Franz Chávez is a Tierramérica contributor.