Gas Politics Heats Up Once More

Last week the Bolivian Congress approved its final version of the long-awaited bill declaring how the country will develop its vast reserves of gas and oil. This is an issue that has brought the nation to the brink over and over again the past three years and once again Bolivia is holding its breath as social movements, political players, corporations, and others take stock and decide their next moves. Here’s a quick glimpse:

The Social Movements: There is no one voice from the country’s left about the deal. MAS leader Evo Morales is reported to have said that he can live with the new law, which includes a version of a 50% tax on foreign oil producers and requires that they negotiate new contracts with the Bolivian government. Other progressive leaders are more skeptical about whether the plan approved will actually deliver the public revenue promised.

All this week, in small meetings and large assemblies, everyone ranging from labor unions to farmer groups will be pouring over the details and deciding what to do. However, in La Paz, the leader of the national workers’ union (COB) and at least one campesino organization have issued a call for national protests and road blockades. How deep support will be for such actions remains unclear.

The Oil Companies: On the other side, the oil companies who will foot the bill for the new tax law are offering up threats of their own. The companies took out full page ads in Sunday papers here proclaiming that the new oil taxes would scare away investment, eliminate jobs, and jeopardize Bolivia’s economic future. As I asked before here: Are they bluffing to move the debate in their direction or are they issuing a warning that is real? The companies have so little credibility with anyone here that what they say really doesn’t matter much anymore.

The Government: President Mesa finds himself between a rock and a hard place once again. His choices include putting the law into effects as is, vetoing it entirely, or sending it back to the Congress with suggested changes. Mesa spent the day Sunday in seclusion with his cabinet and key advisors sorting out what to do but made no announcement. The Cardinals probably had an easier time electing a new Pope than Mesa will have figuring what to do about gas.

On the one hand any veto or revision of the gas law more to the companies’ liking is sure to eliminate any chance Mesa has of avoiding a full scale public rebellion. On the other hand, he is under heavy pressure from the IMF and oil companies to roll back the provisions of the law the companies hate most, such as renegotiating contracts. According to the Bolivian daily, La Razon, President Mesa promised the IMF in March that he would not seek to renegotiate any contract with the oil corporations.

Over the weekend the NY Times cited a UN report that foreign direct investment in Bolivia fell from $1 billion in 1999 to $134 million last year. Corporate opponents of higher gas taxes claim that this is a direct result of the social movements meddling in economic policy, starting with the Cochabamba water revolt against Bechtel. “Economic security”, they say, is essential to investors coming to Bolivia and moves like demanding a renegotiation of gas contracts, they warn, eliminate that security.

It is not an argument or a statistic that Bolivian social movements can afford do dismiss too cavalierly. Nor is it one they need to swallow at face value. The last time Bolivia bought the IMF’s advice on oil and gas it privatized the industry and ended up taking in $40 million less per year, a fortune here. Once again the road ahead in Bolivia is unclear.