Posted on 05/02/2006 9:20:27 AM PDT by Mount Athos
Anyone who seriously believed that Latin America's various left-leaning leaders all thought alike will have been puzzled by the fallout from Bolivia's nationalisation of its vast natural gas fields.
For the most anguished reaction to President Evo Morales' move has come from a country that might have been considered one of his staunch natural allies - Brazil.
Less than four months ago, in the run-up to Mr Morales' inauguration, he and Brazil's President Luis Inacio Lula da Silva were seen smiling for the cameras after discussing co-operation in the energy sector.
Mr Morales came to Brasilia with a track record of activism as a former coca-growers' union leader, as well as a commitment to economic reforms that would benefit Bolivia's impoverished indigenous majority.
But at the same time, he needed to reassure Brazilian investors - especially Brazil's state-owned oil and gas giant, Petrobras - that he would take a business-friendly approach.
Petrobras, which has invested more than $1bn in Bolivia and controls 45% of its gas production, was duly placated. The company's boss, Jose Sergio Gabrielli, said he expected an excellent business climate under Mr Morales.
Betrayal
Now the mood in Brazil is one of betrayal and humiliation.
Mr Gabrielli has described the decree as "unfriendly" and declared that Petrobras will review its activity in Bolivia.
Lula promptly called an emergency cabinet meeting to examine the move.
Evo Morales with Brazil's President Luiz Inacio Lula da Silva in January 2006 Evo Morales and Lula are not getting on so well now
And an unnamed close adviser to Lula was quoted in the Brazilian press as saying that the government had been "caught with its pants down" over the military's seizure of facilities including Petrobras' refinery in the eastern city of Santa Cruz.
Brazil is not alone in its dismay. The Spanish foreign ministry has expressed "deep concern" about the implications for Spanish energy group Repsol-YPF, which controls 25.7% of Bolivia's gas production.
In all, about 20 foreign companies are affected, including BP, British Gas, ExxonMobil and Total.
Punitive terms?
Under the terms of the nationalisation, they are required to agree new contracts with the state-run firm, Yacimientos Petroliferos Fiscales Bolivianos (YPFB), within 180 days.
In the meantime, Bolivia will keep up to 82% of their revenues, allowing them just the remaining 18%.
Unsurprisingly, many of these firms are now wondering whether it is worth continuing to invest in Bolivia at all - and other foreign firms may also be deterred.
If the move marks a clear break between Mr Morales and Lula, it also draws him closer to the more radical approach of President Hugo Chavez in Venezuela, where oil firms are being pressed to change their operations into joint ventures with the state firm PDVSA.
Just days before the Bolivian decree was issued, Mr Morales and Mr Chavez visited Havana to sign a three-way trade pact with Cuban President Fidel Castro.
Blessing or curse?
Mr Morales announced the nationalisation as an end to what he called "the pillage of our natural resources by foreign companies".
In this, he was reflecting the traditional view of Latin American economic nationalists that a country must retain control over its natural assets at all costs.
A soldier holds the Bolivian flag aloft at the Carapari gas plant in Tarija, southern Bolivia, next to a banner reading: Nationalised - property of the Bolivians Bolivian soldiers have seized control of foreign energy assets
That perception is particularly acute in Bolivia, where the indigenous majority feel that the economy is run for the benefit of a wealthy elite who have allowed foreigners to exploit their silver, tin, oil and gas reserves.
The move is the latest chapter in the increasingly tortured saga of Bolivia's huge gas reserves - bigger than those of any other Latin American country except Venezuela.
What should have been an economic blessing to one of the poorest nations in the region has, instead, turned into something of a curse.
Plans to export the gas to the US and Mexico sparked fury among indigenous protesters and led to the downfall of President Gonzalo Sanchez de Lozada's government in 2003.
Adding to their anger, the scheme would have involved shipping the gas via a Chilean port - an outlet that used to be part of Bolivian territory until Chile seized Bolivia's coastline in their 1879-83 war.
With no pipeline to the Pacific Ocean in place, landlocked Bolivia has been selling gas to neighbouring Brazil and Argentina instead.
This makes Brazil not only Bolivia's biggest investor, but also its biggest customer - and therefore a country that it might be unwise to alienate.
Mr Morales announced the nationalisation as an end to what he called "the pillage of our natural resources by foreign companies".
Brazil could have solved that problem just by annexing Bolivia. Then they would not have been "foreign" companies. In fact, they might yet.
Morales is now talking about nationalizing mining and private land also.
Shades of Zimbabwe. Another uneducated neaderthal that won't learn from history.
What will happen is what always happens when these indeginous leftist types take over a country. They will run all the knowledgable people out of the country, turn the operation over to their buddies, the gas field will cease to function and Billions of dollars of natural resources will go unused as the economy of the country tanks.
This why we need to do what is necessary to develop all of our own oil and gas resources. The Marxist that run these countries don't view the world in the same way we do, and we can not depend on them to follow a capitalist path of 'we may be Marxist but we still need to make a buck.'
The "Zimbabwe Zyndrome" is spreading faster that ebola in a crowded hospital...........
The companies should leave things as they found them.
China will do it
Er, that's not the same. Nationalizing an industry is a long way from having reservations about certain aspects or events in the world of free trade.
Morales seriously believes that no one should buy Bolivia's natural gas, and that the company is going to make its living producing coca leaves.
I was wondering about Brazil's reaction. IIRC, the Spanish company Repsol company has an Argentine partner or component. I wonder what the Argentines will have to say? Both Argentina and Brazil have leftists in charge, but I don't think they're nutcases the way Morales and Chavez are.
Punitive terms?
Under the terms of the nationalisation, they are required to agree new contracts with the state-run firm, Yacimientos Petroliferos Fiscales Bolivianos (YPFB), within 180 days.
In the meantime, Bolivia will keep up to 82% of their revenues, allowing them just the remaining 18%.
Maybe all the folks who bray about "excess profits" would like to operate in this business environment.
This is not the first time this has happened to oil companies, this sort of crap goes way back.
If we weren't so damned dependent on hydrocarbons.. can you imagine how irrellevant the poorest and most ignorant parts of the world would be???
Just an observation.
Only DPW was prevented from operating a US port. Other foreign owned companies operate in our ports, including Hutchinson Whampoa.
They likely will just shut down the production completely...rather than run in the red for these Reds.
Let's see how well these cretins produce their own oil...and just how and where they will get it marketed... don't most the pipelines run into Brazil?
Petrobras, which has invested more than $1bn in Bolivia and controls 45% of its gas production, was duly placated. The company's boss, Jose Sergio Gabrielli, said he expected an excellent business climate under Mr Morales.But at the same time, he needed to reassure Brazilian investors - especially Brazil's state-owned oil and gas giant, Petrobras - that he would take a business-friendly approach.
The only twist here is that it was done to FELLOW LEFTISTS. Hoist by their own petards!
But still, it is cold comfort for us, with these movements being mightily fueled by Chinese political/military machinations in the background and their covert influences with these 'allies.' Can't believe we still allow the Chi-Comms to get ANY foreign direct investment to enable their tyranny to strengthen...
Silver stock went south today when rumors started about this guy nationalizing the mines. They rebounded later whne he said he's only tas the bejesus out of them.
tax=tas
Fox just was covering this. Armed troops are standing out in front of buildings.
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