The Bolivian Government's India Mining Deal: Who Says Socialists Can't Be Smart Capitalists?

Watchers of the new government's economic maneuverings have been keeping an eye on this one – negotiations with the Indian mining giant, Jindal Steel and Power, over the joint development of one of the world's largest iron ore deposits at El Mutun. After weeks in which it looked like the deal might well fall through, yesterday the company and the government announced agreement on a final accord. Jindal will invest $2 billion over the course of the next 7 to 8 years and the two sides will split profits from the mine 50/50. Here is the coverage of the deal in today's Los Tiempos (Cochabamba daily).

The deal is important news for two reasons.

First it solidifies that the world of potential foreign investors in Bolivia has moved well beyond the traditional players from its South American neighbors, the US, and Europe. The Asian investment door is not a piece of election campaign rhetoric; it is real (though the dream deal to market Bolivian coca tea to China is probably a little more elusive).

Second, it shows that the Bolivian government is neither naïve nor crazy to deal hard with foreign investors. That is capitalism played the smart way and, as far as this deal is concerned, it showed that new-to-governing socialists are capable of playing that game a lot more ably than the foreign-educated supposed economic whiz kids under Goni, Banzer, and Quiroga who got rolled in similar negotiations. One need only compare MAS' Jindal deal with Goni's "18% is fine thank you" gas deals a decade ago.