And Now Cochabamba

Just a quick Blog today to note that, as I predicted yesterday, the blockades have now started to reach into Cochabamba.

As I write, most of the major bridges that connect the central city to the north are closed down by the teachers’ union. Bus service between Cochabamba and both La Paz and Oruro have been suspended. The same may be true of service to Santa Cruz starting tomorrow.

To be sure, if you aren’t trying to cross one of the blocked bridges or trying to take a bus out of town, Cochabamba seems pretty peaceful and quiet today. Nevertheless, the blockades are spreading. This offers a Bolivian lesson to our reader yesterday who classified as “hype” my headline Bolivia Heads for a National Shutdown and said these things were limited to La Paz and El Alto. Just because your neighbrhood is quiet and everything looks normal, never underestimate how things can change here in a heartbeat.

Bolivia Heads for a National Shutdown

After a weekend of relative calm, the new week brings a renewal of protests and La Paz and threats by social movements to shut down other major parts of the country, such as Cochabamba.

Neighborhood groups in El Alto, coca growers, campesino groups from the altiplano, the national labor federation (COB), and others have focused their demands on the immediate arrangement of a Constituent Assembly to address the gas issue and a restructuring of formal political power in the country. The Congress is supposed to come back into session today to address that issue but many members have demanded guarantees that they will be allowed to meet. The movements have been trying to shut the Congress down.

As I wrote last week, the most obvious of the “exits” from the current confrontation is that the Catholic Church, the Assembly on Human Rights, and the Defensor del Pueblo get the movements and the government to a table to negotiate a “truega” or pause. The most obvious way to do that is for the government to agree to the convening of the Constituent Assembly with no restrictions on what it can take up. I think that anything short of that means that the conflicts will go on and will escalate in ways no one can predict. Hopefully the government will have the good sense to make that announcement soon.

A Comment on Comments

Last week we started allowing people to post comments on this Blog and the response has already been strong, with a flurry of postings from left and right. A couple of notes on our new comments feature. First, while I try to glance at the comments occasionally I am not going to take time to respond to them. If I did then I wouldn’t have time to do my job. Second, despite a recent, mistaken suggestion otherwise, we don’t “censor” any commentary. There isn't even a human in the loop on this, a computer somewhere posts the comments.

Lastly, in contradiction to my note above that I do not comment on comments I will say this to the guest who attacked me for my “lack of support for the revolutionary surge of the Bolivian masses” and other assorted offenses. There are indeed people out there who troll the world (and apparently the Internet) looking for people who don’t come up to their standards of leftist purity. I gave that up around my junior year in college. It didn’t seem all that useful then and seems less so now. I also don’t share the romatic love that some outsiders to Bolivia have with violence for the cause. I have spent too many hours with the mothers of dead young people.

Aymara Rap – in the New York Times

Today’s New York Times has an interesting article on politically charged Aymara language Rap music, created and sung by youth in El Alto. It has an even better, terrifically shot, slide show with sound that you can see and hear on the Times Web site. By all means check it out. Here's the link.

Catholic Holidays and Coup Alerts

Here’s what it looks like Thursday morning.

It is a Catholic holiday today (Corpus Christy) so religion has once again succeeded in achieving what social movements have tried to do over the past week – shutting the country down.

Meanwhile, the more paranoid among us here are on coup alert as rumors of some form of Presidential ousting – be it from the left or right, if that means anything right now – is in the works. A couple of Army Lt. Colonels appeared on TV yesterday calling on President Carlos Mesa to step aside to “make room for a government of the people”. The soldiers also repeated the call by social movements to nationalize Bolivia’s oil and gas and to immediately convene a Constituent Assembly to rewrite the constitution.

In the time it takes for to devour a fine cob of Bolivian corn, the head of Bolivia’s armed forces went on TV himself, labeled the Lt. Colonels renegades and declared that the military stood solidly behind the President and democracy.

I don’t put much credence in the threat posed by yesterday’s announcement. To steal a phrase – I doubt that a coup will be announced on television. Nevertheless it all put people on edge for much of last night, amidst other reports that Senate leader Vaca Diez (a critic from the right of President Mesa) was oddly headed for Santa Cruz.

The real guessing game right now – as it always is at this point in a Bolivian political crisis – is trying to predict how the scenario plays out to some end. Here’s my guess.

The upheaval in La Paz will continue and Bolivia will appear to be just at the point of a total meltdown. Behind the scenes groups and institutions such as the Permanent Assembly and Human Rights, the Defensor del Pueblo, and the Catholic Church will be talking to everyone and out of the blue a truce will be announced and talks held, most likely to finalize the date and terms of the Constitutional Assembly. Bolivia’s inevitable confrontation over not just gas but political power and who has it will be delayed off into the future for a few months.

The dilemma is that there is no middle ground and no matter who tries to establish some they get run over, like “Armadillos in the middle of the road” as Jim Hightower would say. President Mesa tired to play the middle ground and has become almost irrelevant. Evo Morales, ironically, tired to position himself in the middle (by calling for a 50% tax on gas companies but not all-out nationalization) and finds himself under harsh attack from his left.

The middle ground may no longer be Bolivia’s solution. The Aymara nation has pretty much served notice that its tolerance for Bolivian apartheid is at an end. Bolivia’s economy can’t sustain many more years of the Washington Consensus economic model that put its gas and oil into foreign hands and has left the poor only poorer still.

Sooner or later Bolivia is going to have to change direction in some dramatic way. When? 2005 is starting to look like a pretty good bet.

The Democracy Center on Democracy Now Wednesday

Readers: For those interested I will be doing an interview on the situation in Bolivia on Wednesday morning (8am) on the Pacifica radio program Democracy Now. Here the link to their site where I believe it is possible to listen to the show if you miss it live. Also appearing on the show will be Oscar Olivera.

Bolivia in the Crosscurrents

Thousands of people from the altiplano have descended on La Paz. Miners have refused to give up the use of the occasional stick of dynamite in their protests. American Airlines has announced that it won’t be flying into La Paz. Congress has been given a four-day ultimatum by the people in the street to either set events in motion to rewrite the constitution or be shut down. The military swears it won’t be a part of any coup.

That’s how it looks in Bolivia tonight.

Bolivia is caught in the midst of a series of volatile crosscurrents and the outcome is anyone’s guess. This isn’t October 2003 when the lines were clean – huge public objection to a government gas export plan, followed by massive public rage against a President who thought the best way to deal with protesters was to shoot them, followed by a Nixonian departure into exile.

Today the factions and demands are many and hopes for reconciliation are evaporating quickly. A summary:

The Aymara Nation: I have been telling foreign reporters for a week that the main question was how intense a reaction we would see from the Aymara Nation, the population of that vast, flat, and impossibly high expanse of altiplano that stretches from El Alto to Lake Titicaca. The answer came in today in the form of thousands of angry protesters in the capital demanding two things in particular – nationalization of Bolivia’s gas and oil and an immediate move toward a national Constituent Assembly (more on that below). One question lingering over events here has been whether the demand for nationalization would be able to maintain intensity and that depended on the altiplano. Intensity is no longer a question.

The National Labor Union (the COB): Jaime Solares, the head of the COB, seems dedicated to saying the most inflammatory thing that comes to mind. That wouldn’t matter so much if the press wasn’t looking to him as a major spokesperson at the moment and if what he was saying wasn’t so dangerous. The latest is his call for a new military-led government to takeover Bolivia (akin he says to the Chavez coup years back in Venezuela that failed). In a country where military dictatorships ruled for decades leaving behind a trail of dead, disappeared, and tortured, his suggestion is not especially welcome by anyone else, left or right.

MAS and Evo Morales: How ironic that the man who the US has been trying to paint as one of the most dangerous radicals in Latin America has emerged as the “moderate” in all this, so much so that he and MAS find themselves bitterly attacked from the left. Evo and MAS weren’t talking nationalization until a week ago, focused instead on lawmaking in the Congress toward a 50% tax deal. By many reports, Evo and the coca farmers marching at his side were not well received by the people of the altiplano when they arrived in El Alto yesterday.

Santa Cruz: A country length and a climate away the movers and shakers in Santa Cruz are saying that they are fed up with the protest politics in the highlands and are pushing for a quick vote on regional autonomy. As I have written before, this too is about oil and gas, and a regional desire to keep as much control (and profit) as possible from gas development in that side of the country.

The Oil Companies: They have a mantra. We will leave. We will sue. We will leave. We will sue. We will leave. We will sue. They are shouting that mantra loudly into the ears of the government and to any reporter, domestic or international, willing to listen. I am sure that the IMF, Bolivia’s co-governing body, is privately issuing similar economic warnings as well.

The Government of Carlos Mesa: It is actually easy to forget that Bolivia has a government right now. Frankly, the President seems almost irrelevant. Every few hours he pops up on television to make another articulate plea that no one listens to – don’t talk about gas anymore, I have an economic plan I’d like to talk about. The disadvantage of speaking into the red light of a TV camera is that you can’t tell that no one is listening.

The Constituent Assembly vs. Autonomy: Here the race is on between two visions of how to remake the Bolivian state. On the one hand the social movements on the left and in the altiplano are focused on quickening up national plans for an Asamblea Constituyente, essentially a national constitutional convention that would rewrite the rules of democracy from scratch. For its backers that includes talking about issues like gas. Last time I talked to those in charge of this in the government their vision was a process in which all content issues (like gas) were off the table and delegates would only talk about how to change the process of elections, etc. Santa Cruz’s call for a regional referendum on autonomy is essentially a preemptive strike against the Asamblea. In other words, put of a political fence around their part of the country so that the new national rules won’t really apply as much.

Complicated enough?

Today’s New York Times Article on Bolivia

This morning the New York Times ran an article on Bolivia’s political crisis over gas, in which I was quoted. The article focuses on how polarized Bolivia has become over the gas issue, which is true. But then it goes on to paint the two sides of the debate in a way that seemed more cartoon than fact. As with so many of the news articles this past week, the backers of gas privatization are sold as solid economic scholars and opponents as the uneducated masses.

Here’s an example:

On one side, there are Bolivians like Carlos Alberto López, a former vice minister of energy who was educated at Harvard and the London School of Economics.

Across this capital, in a small office decorated with posters of the revolutionary icon Che Guevara, another protagonist expresses a sharply opposed viewpoint…Jaime Solares, 53, who started working at age 13, has a 10th grade education and heads the Bolivian Workers Central, the country's largest labor confederation.

The US national paper of record has reduced the gas issue to a debate between a star from Harvard vs. a high school drop out.

The first problem with this is the inference that the education that really matters here is the kind one gets at Harvard. Well, I went to Harvard (Masters in Public Administration, 1985) and I have learned just as much economics from regular “uneducated” Bolivians as I did from Robert Reich and Lester Thurow. Take Victor the plumber, for example, with whom I spent a day fixing the water pump at our house years ago. Victor explained to me, many years before the gas rebellion erupted, that Bolivia’s greatest economic mistake was selling its natural resources as raw products without the value added of turning them into something else (such as turning crude into gasoline or electricity). Economics 101 – and a lesson that the Bolivian government never seemed to figure out.

Second, it is just plain not true that all the “educated” experts are opposed to Bolivia taking back control of its oil and gas. One of the economists who has studied the issue most closely is Roberto Fernandez Terán. Below is the letter to the editor he sent to the New York Times today. It is too bad that this point of view didn't make it into the Times article.

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Letters to the editor
New York Times

The Times’ coverage of the Bolivian debate over gas and oil (Bolivia Epitomizes Fight for Natural Resources, May 23, 2005) oversimplifies the issues and leaves readers with the false impression that there are not solid reasons behind the popular demand for nationalization.

Why are social movements calling for Bolivia to take back control of its gas and oil?

First, the contracts that gave Bolivia’s gas and oil to foreign energy companies in the 1990s are unconstitutional because they were never approved by the Bolivian Congress, as required by law. Second, those same corruption-driven privatization deals gave away, to foreign companies, proven gas and oil reserves worth more than $11 billion. Third, before privatization, nearly half of the revenues coming into the Bolivian treasury came from the publicly-owned gas and oil industry. Today the foreign oil companies that have replaced that public ownership are contributing less than ten percent and much of that is passed on to Bolivian consumers.

In Bolivia the cost of producing and transporting a barrel of oil is approximately $7. Yet Bolivians are being forced to pay world market prices for our own oil, currently $48 per barrel.

Like any other country, we in Bolivia do not want to sell our gas and oil in raw form at bargain prices. Countries reap the real economic benefits from their gas and oil when they industrialize domestically and sell it as processed products – gasoline, plastic, electricity, etc. Foreign oil companies want to keep Bolivia, South America’s poorest nation, from doing that.

Why would the people of any nation with severe unemployment and a lack of economic opportunity willingly accept such an arrangement? It should be no surprise that millions of Bolivians are not willing to accept the give away of the nation’s oil and gas.

Roberto Fernandez Terán
Economist, Professor
University of San Simon
Cochabamba, Bolivia

What’s at Stake

Sunday evening and we just had a surprise visit from our friend Carlos Prado, a Bolivian curandero, and a well-known expert here in traditional indigenous medicine. Surprise visits by friends are one of the things that make Bolivia so different from the US. He came just in time for pumpkin soup. Maybe Bolivian curanderos also have a sixth sense about food.

Visiting with Carlos is a reminder of what is at stake deeper under the surface in Bolivia’s social struggles. It is not just about gas, or economics, or political power. Beneath the surface is a battle for the survival of a culture.

Here in Bolivia, once you get out of the tiny circle of the middle class and the affluent you find a culture that is still indigenous (as is more than 60% of the population of the country) and still dedicated to a certain set of values and way of life. Here the tradition of greeting the sun as it breaks the frigid night of the winter solstice is as rooted in the culture as is heading to shopping malls like fiends in the US the day after Thanksgiving.

And that’s the point. The US suffers from a disease of cultural arrogance. A lot of Americans, if not most, believe that the practices of materialism – days spent in malls, driving cars the sizes of small tanks, arranging houses that look like castles – that this is what all people in the world want to aspire to and ought to. No matter that such affluence comes at the expense of our environment, our family life, and our sanity. Addictions are addiction s and materialism is no different.

A New York Times reporter asked me the other day if Bolivia was more polarized than it has ever been. I think the answer is yes. But I don’t think that the lines are strictly economic, or even based on regional interest. I think Bolivia is dividing into two countries. One is populated by people who desperately want Bolivia to become the US, who want a shot at US style affluence and all its material trappings, and who are bought into the idea that foreign corporations will deliver it to them.

The other Bolivia lives close to the earth. It isn’t seeking affluence but it is hoping for a future in which the basics of survival – food, health care, clean water, some land, a way to make a modest living – do not seem always out of reach. And importantly, this Bolivia resolutely does not want to be the US. It does not want to trade in cuñapes for Big Macs, Todos Santos for Halloween, or the winter solstice for a binge of buying.

As the globe becomes more and more integrated each nation brings to that integration some particular character, like a dysfunctional family. We know too well who the know-it-all father is these days, ordering people around without listening. Bolivia, in this global mix, has a message and the world will be better of for the hearing of it. Beware of the deluge of materialism. Beware of what it causes us to become and what it leads us to do unto others.

Bolivia’s indigenous culture will not go quietly into the night as the globe clones itself into the USA. If the world pays attention it might preserve something vital in all our natures that is so close to being lost that it is almost invisible.

And Now You Can Add Your Comments to the Blog

Dear Readers:

When events in Bolivia start to boil, so does interest in our Blog. Over the past week we have seen over 1,000 visits per day to The Democracy Center’s Web site.

It seems especially important now that our Blog from Bolivia become a place where people can exchange views and analysis on what is going on in this corner of the world. With that in mind – and in response to many requests that we do so – tonight we add a feature allowing our readers to post comments, unfiltered.

Anyone can post and no one at The Democracy Center is going to go through and edit or approve them. Now the Blog belongs to you as much as it does us (okay, except that only I have my picture up here).

Let the debates begin!

Marches Here and There

Bolivia is on the march. We just don’t know to where.

Three thousand campesinos (poor farmers) and coca growers are on the march on the highway to La Paz. Here in Cochabamba another 2,000 people marched under a burning sun from the city’s central plaza two hours out to a Brazilian-owned oil refinery on the edge of the poorest neighborhood in the city. Bolivia’s rebellion over gas exportation appears to be just warming up.

Monday is the day that the whirlwind of protest is likely to hit La Paz. On Tuesday there will be a summit in the capital of a broad array of social movements to determine what course of action to take next.

Bolivia’s deep divisions are on display in bold this week. One Bolivia is marching for economic justice. Another is marching to packed movie theaters to catch the first weekend of the new Star Wars film.

I confess to having a foot in both camps. This morning I went to the oil refinery to cover the protest. Tomorrow night I am taking my two oldest kids to see Yoda wield a mighty light saber. At least in Star Wars, we pretty much know how it turns out (FYI, he becomes Darth Vader).

A pleasant weekend to all.

The Foreign Press Coverage – Falling Short

Three hundred and sixty days of the year the international press ignores Bolivia altogether. Then the country erupts, as it has this week, into a full-blown political crisis and the foreign press rushes to explain events here. How are they doing? Unfortunately not so well.

If you scan the major articles published this week one trend becomes pretty clear. As a national debate over gas privatization rages here, the foreign press has pretty much abandoned the work of serious analysis and paints that debate as one pitting sober experts on the one side and raving protesters on the other. Take a look:

The New York Times

The Times’ Juan Forero is generally a thorough reporter (and a fine writer as well). The best of the lot, the Times piece on Tuesday still falls square into the “experts vs. protesters” trap.

On one side the Times quotes a former Bolivian vice minister who now consults for energy firms: Companies have found gas reserves but have not had the conditions to even think of developing them. It is difficult to see how this sector will grow and develop. It quotes Brazil's minister of mines and energy: Approval of the hydrocarbons law will without a doubt entail serious difficulties for Brazilian investments in Bolivia. It quotes the president of Repsol in Bolivia, warning that the new gas law would: force us to abandon many gas fields.

On the other side the Times quotes a MAS Congressman: We are going to fight against this law. The marches have to continue because in Congress, not all the senators and deputies defend the people. Sometimes they defend the multinationals. It quotes a leader of the El Alto community groups: We say yes to nationalization of the hydrocarbons.

The Times coverage makes the debate seem like it is experts vs. placards.

Bloomberg

The New York-based business news service quotes the president of the Bolivian Chamber of Commerce for gas and oil: This means Bolivia distances itself from the investment circuit and the major potential for trade and projects with neighboring countries. The country is the big loser today. Then it reaches to Scotland to find an oil and gas expert at ING Financial Markets: Taxation is not at a reasonable level and long-term investment must be questioned.

From the other side the best Bloomberg could do was lift a quote they heard on a Lima, Peru radio station from MAS leader Evo Morales: The situation has become tense once more because the government continues to serve the multi-national companies. Congress must change this law, because it doesn't favor the Bolivian people.

Once again, experts vs. political rhetoric.

Reuters

The self-proclaimed “leading source of World News” took the minimalist approach to the Bolivian gas uprising. It quotes “The U.S. government” [whomever that was] saying that Bolivia’s new energy bill: would ‘inhibit’ foreign investment. It then quotes an El Alto labor leader saying: We are demanding nationalization of our hydrocarbons without compensation (for companies). Not exactly deep or informative analysis.

AP

The Associated Press went more minimalist still. It quotes the Brazilian Energy and Mines minister warning: This new law will certainly lead to changes in Petrobras' investment strategy in Bolivia. The company will reduce investment expansion plans. AP couldn’t be bothered to contact any Bolivians for their story at all.

What Happened to Serious Analysis?

The fact is that, beneath all the drama of protesters in the streets and a government on the brink, there is a serious policy debate at hand. Should Bolivia seize back control of its oil and gas? Can a poor country make the economics of oil and gas work more to its advantage without foreign corporations in the driver seat? Is a 50/50 split with foreign corporations extravagant or just plain fair?

There are two sides to this debate and all these reports have missed the boat in providing a real analysis and fail as well to reach beyond the social movements’ street rhetoric to the serious expertise that backs their position.
If the foreign press wants to interview Bolivian experts who know their stuff on the gas issue here’s two:

Roberto Fernandez Terán: An economist at the University of San Simon in Cochabamba, Roberto is the author of an important book on the role of the IMF and the World Bank in Bolivia (The IMF, the World Bank and the Neocolonial State, Plural Press). He has also spent a good portion of the last year digging through the details of Bolivia’s dealings with foreign oil corporations.

Carlos Villegas Quiroga: Another respected Bolivian academic who is author of a seriously researched history and analysis of Bolivia’s experience with gas privatization, Privatization of the Petroleum Industry in Bolivia (Plural Press).

A note to foreign reporters: You don’t have to call Scotland to get the story on the Bolivian gas debate and you don’t have to limit your coverage of the debate to slogans shouted in the street. You owe your readers better.

My Pacific News Service Article On The Gas Crisis

Today I published an article on the current Bolivian gas crisis, syndicated nationally in the US by Pacific News Service. Here’s the lead:

COCHABAMBA, Bolivia--On a hilltop overlooking this Andean city of 600,000 sits the largest statue of Jesus in the world. The statue's outstretched left arm points down to one of the city's poorest neighborhoods, Valle Hermoso, and to the gray tanks and towers of the Brazilian-owned oil refinery belching smoke on the neighborhood's edge.

Protesters have threatened to march on the oil refinery and seize it. Two hundred miles away in La Paz, thousands of angry indigenous people, miners and workers have been marching on the nation's capital, threatening to seize the Congress.

Bolivia, once again, has exploded into conflict over the volatile issue of who owns its vast and lucrative gas and oil reserves.

Read the article.

Are Bolivians Crazy?

This, in between the lines, is the question being put on the table in the international and domestic press coverage of Bolivia’s exploding political crisis over gas. As Bolivians take to the streets to demand ‘nationalization’ are they engaged in a national round of killing the golden goose, chasing away the very foreign investors they need to develop their oil and gas?

Today’s New York Times, for example, carries an article in which it notes that “gas investments have fallen precipitously, to less than $200 million last year from $608 million in 1998.” La Razon quotes an official of Spain’s oil giant, Repsol, saying that the country’s freshly minted gas law will "force us to abandon many gas fields." Let’s not even go into what they have to say about the calls for nationalization.

So, are Bolivians crazy?

First, once again, let’s peel away the rhetoric and see what facts lie below the surface. This afternoon I asked Carmen Peredo – a key leader of the irrigators’ union and major figure in the call for nationalization – what nationalization really means. What do they actually want? Here’s how she explained it.

Right now Repsol and other big foreign oil companies have a set of shadily negotiated contracts (they weren’t reviewed or approved by Congress and may well be illegal) that allow their Bolivian subsidiaries to pump the oil out of the ground and sell the gas at rock bottom prices to their international parent companies. Bolivia gets a meager cut of the profits, but that cut is based on the artificially low prices. With world oil prices soaring one would think that Bolivia would be raking in the cash. The fact that it isn’t has everything to do with the bogus contracts under which the government gave the gas away.

Carmen says that what nationalization means, in this instance, is really about cutting out the middleman. If Repsol, British Petroleum, Shell or any of the others want Bolivian gas Bolivia would still happily sell it to them, but not at bargain prices set by those companies’ own subsidiaries. What the movements are demanding is that Bolivia set the sale price and that Bolivia take the big profits that the companies are now reaping through the scam of being both buyer and seller.

But where is Bolivia going to get the investment capital to develop their gas fields and the other infrastructure needed? Carmen says that there are all kinds of potential suitors, from Japan, China and elsewhere, who would be interested in getting their hands in on a deal to develop South America’s second largest gas reserves. Bolivia’s social movements, she says, are willing to deal with international players but from a position of controlling their own gas not having negotiated it away behind closed doors.

Is there much more than this to the economics of Bolivian gas? Sure. Unfortunately, be it from the NY Times or the dispatches from the left, the actual economic questions seem to be getting glossed over. In the former we get sober warnings from analysts and corporate officials who happen to have a big money stake in their dour spin. On the other side we have romantic tales of a people on the march that don’t actually ask any of the hard economic questions involved and ignore the fact that there are a lot of Bolivians, including poor ones, not too keen on the protests that threaten to bring down the government.

All that said, Bolivians are not crazy to be demanding control of their huge gas reserves. The path that starts with getting back that control and ends with Bolivia developing a real income generator for development may be much harder and more complicated than some movement leaders here suggest. But they aren’t crazy to say that there is another way besides handing the golden egg over to a host of multi-national corporations.

The President Punts – Congress Acts – Altiplano Furious

Events in Bolivia are changing by the minute.

Bolivian President Carlos Mesa gave his speech to the nation on the gas issue this afternoon, and roughly translated he said, “Well, I have decided not to decide. Let’s let Congress decide.” Mesa basically had three options. He could veto the gas bill approved by the Bolivian Congress, approve it, or do nothing and let Congress act. He chose the latter, probably hoping to buy some additional time to negotiate.

That option was washed away moments ago when the President of the Bolivian Senate used his constitutional powers to sign the Congressionally approved gas bill into law.

Reaction from the Aymara communities in El Alto has been swift and furious – this from the center of the protests that ousted Bolivia’s last President, Gonzalo Sanchez de Lozada, over the gas issue in October 2003. Aymara leaders have called for blockades of the roads leading in and out of the capital and have labeled the President and the Congress as traitors.

This also opens up a serious split among Bolivia’s left. The thousands who have been marching on La Paz from El Alto are not in a compromising mood. They are demanding full renationalization of the oil and gas and as any observer of Bolivia will tell you, when the Aymara community sets its mind to something, people are not to be messed with. MAS and Evo Morales have been focused instead on a package of specific modifications to the new law, including tightening the new 50% tax on the foreign companies and demanding a return of control of the reserves to the government.

So tonight Bolivia is awash with political time bombs. The people of El Alto and the altiplano are in La Paz. Evo and his allies are on a long march on a very cold road headed their way. It is now possible that when they arrive on the outskirts of La Paz in two days they are likely to get a reception more chilly than the freezing nights they endured getting there – turned away as unwelcome compromisers.

That is how it looks on Tuesday evening.

Tuesday Morning – Protests and a Presidential Address

On Monday thousands of protesters from El Alto (the much poorer sister city adjacent to La Paz) marched on the capital pressing three demands: nationalization of Bolivia’s gas; the resignation of President Carlos Mesa; and the closing of the Bolivian Congress. As they approached Plaza Murillo – the city’s political heart, home to both the Congress and the Presidential Palace – they were met with police blockades and tear gas. There were some minor injuries, according to press reports, but nothing on the scale of past government repression.

Monday’s actions to keep protesters away from the center of government reminded me of a conversation I had with Mesa when interviewing him for our IMF report. I asked Mesa, then the Vice-President, what one thing he would have done differently if he could live over the violent days of Febrero Negro (2003) when the army and a unit of the national police had a shooting war in that plaza. He told me that he would have militarized the plaza early to keep it from being taken by protesters. So Mesa is now true to his word.

Pressure against the President is building from all sides. In addition to the El Alto march on the capital another large march, led by Evo Morales, left yesterday from the midpoint between Cochabamba and La Paz, headed for the capital as well.

At 1pm this afternoon (equivalent to 1pm NY time) President Mesa will deliver a speech to the nation. Mesa is a fine speaker, a skill gleaned from years as a TV newscaster. But as the crisis mounts, style will mean very little. If Mesa isn’t willing to reverse course and back a gas law that challenges the oil companies and IMF I think his days as President may be limited.

I’ll write more news as we have it.

Gas Update – Congress May Bypass President

Tomorrow morning (Monday) is when we get our first glimpse of the promised explosion of street pressure aimed at pushing the Bolivian government to adopt a gas and oil law that truly benefits the Bolivian people. Meanwhile, a few developments and comments.

Congress Considers Sidestepping the President

This morning’s Los Tiempos newspaper in Cochabamba leads with an article saying that the Bolivian Congress is considering bypassing President Carlos Mesa entirely and implementing the Congressionally approved gas law on its own. Mesa has threatened to veto the gas bill and is reportedly readying a new one more to the liking of British Petroleum and the other companies. The Bolivian constitution allows for the Congress to implement the law without the President’s approval (roughly the equivalent of overriding a US Presidential veto) and a move is apparently afoot to do so.

Further, the newspaper reports, the move has the support of all the major political parties in the Congress, including MAS, the Socialist Party led by Evo Morales. The paper quotes a MAS Congress member as saying that the party would support the new law as a vehicle to block Mesa from weakening it and would then begin a campaign for a modification to the law to “nationalize” Bolivia’s gas and oil.

Some Analysis

The combination of MAS backing the new Congressional gas law and joining in street pressure for “nationalization” isn’t a bad strategy. It helps lock into law the most “progressive” viable alternative currently on the table but leaves the door open to ratchet it up to something even stronger in terms of returning control of the gas and oil to the Bolivian public. It also makes MAS look politically reasonable, which it needs to do as part of its longer-term strategy to eventually win the presidency.

That said, it is important to look beyond the rhetoric of “nationalization” to the actual policy questions involved [I am a closet Harvard-trained policy analyst, but please keep it a secret]. In the end the story that counts is the actual requirements of the law, not the rhetoric involved.

None of the major political actors, including MAS are disputing that foreign corporations will play some role in exporting Bolivian gas. The two most critical questions are:

How do Bolivia and the companies split the profits?

Who controls the volume of production, the sale price, and other details?

The answer to the first question lies in the formula that the Bolivian government adopts for taxing the companies. The rallying cry for months has been “fifty percent!!” and the new law approved by the Congress includes a 50% formula. However, these taxes are wickedly complicated and I think there may be half a dozen people in the country who can tell you what the formula really means. Has Congress approved a real 50% formula or a fake one? I can’t tell you for sure, but we’ll be working on finding out this next week.

The answer to the second question lies in what has become the demand for “nationalization”. In the current debate nationalization doesn’t really mean that the Bolivian government would take on the job of pumping gas and oil out of the ground, processing it, piping it to the coast, and selling it directly to end users. In the current debate nationalization really means control – control of how much gas gets pumped out how fast, of who it gets sold to and at what price.

Democracy in Action

Remember, in the midst of all the conflict this week in Bolivia, something remarkably democratic and hopeful is happening. In poor nation after poor nation gas and oil deals like this one are debated and enacted behind closed doors without the public having any real understanding of the issues or opportunity to shape the outcome [Note: For more on this see my recent book on the subject, Follow the Money.]. The Bolivian people, plain and simple, are saying that they won’t get left out or ignored. The fact that people are willing to march, to protest, to study, and to have strong opinions is not something to be feared but something from which the rest of us ought to draw incredible inspiration.

The alternative is to do as my fellow Californians did when Enron manipulated energy prices and fleeced them for billions a few years ago. The people of California, unlike the people of Bolivia, just paid the bill and just plain let themselves get rolled. Bolivians do not take such abuses so lightly.

A Personal Note to Friends of Oscar and Marcela Olivera

Some of our readers are personal friends of Oscar and Marcela Olivera, two people very close to us here (Marcela is my main workmate here at The Democracy Center). Yesterday morning Marcela and Oscar’s mother Nora passed away. This afternoon a group of many friends joined together at the Cochabamba Cemetery to help them lay their mother to rest. Obviously, this is a very difficult time for Oscar, Marcela and their family. Those of you in contact with them might wish to send your condolences and best wishes.

Gas Uprising Update: Car Bomb and a Summit Cancelled

As of Friday evening it still looks like Bolivia is headed toward a major social confrontation starting Monday. Here’s the latest.

Car Bomb Explodes in Santa Cruz: Reuters just published a report on the wires that a car bomb exploded earlier today outside the Bolivian headquarters of the Brazilian national oil company, Petrobras. The company is a major player in export of Bolivian gas and oil. No one was injured but the explosion clearly indicates that the rebellion against foreign control of the nations gas and oil reserves could take a violent new turn. A previously unknown group calling itself the “Patriotic Block” claimed responsibility for the bombing and warned that other attacks could follow.

President Cancels Summit: President Carlos Mesa’s plans for a national summit to try to find a peaceful solution to the gas battle fell apart Friday as Mesa announced that the Monday meeting has been cancelled until some unspecified future date. It isn’t hard to figure out why. Mesa’s summit proposal went over like a lead balloon in quarters across the political spectrum. Key leaders on the left, including Socialist Party leader Evo Morales, had already dismissed the meeting as a gathering of people allied with the foreign oil companies. Then yesterday both the Congress and the head of the national Supreme Court formally announced they would be no shows as well. There are various reports this afternoon that Mesa is drafting a whole new gas bill proposal to submit to Congress. That plan, following months of hard Congressional negotiations, is likely to be met with about as much enthusiasm as his summit proposal.

Marches Begin Monday: Indigenous and community groups in El Alto have reaffirmed their plans to march on the capital Monday. Labor, farmer and citizen groups from other parts of the nation are also still moving ahead with plans to start a longer three day march on La Paz (the capital) starting Monday as well. Marchers will face bone-chilling cold nights on the 14,000-foot-high altiplano. I asked one young marcher this afternoon how he was planning to get there. “Wrapped in a lot of warm clothes,” he told me. El Alto groups defended their plans saying that marches and popular protest is the only thing that the government really listens to. They, unfortunately, have a point, which leads me to:

It’s About Foreign Pressure: From outside Bolivia it may well look like the nation is headed to a political meltdown for the lack of an ability by its leaders to negotiate peacefully. The truth is that, if Bolivians were really being allowed to reach a gas accord as Bolivians, they could probably work things out. I have spoken over my time here with many of the political actors involved – from the President to social movement leaders. They are smart and they really do love their country.

But Bolivia really isn’t being allowed to hash this out as Bolivians. The IMF is holding a cleaver over the nation’s head if it seeks to renegotiate existing contracts with British Petroleum, Petrobras and the other companies. The companies bought themselves a batch of lucrative contracts a decade ago when the IMF forced Bolivia to the privatization table. Control of the continent’s second largest petroleum reserves is a lucrative prize and no matter how unfairly it was won they will fight tooth and nail to keep from having to turn it back over to the Bolivian people.

This afternoon I spoke with a UN official from New York, as the global assembly decides what it ought to say about the events unfolding here in the Andes. Here’s what I said. The message should go forward to the IMF and the oil companies to back off. This is Bolivia’s gas, it is Bolivia’s future, and it is Bolivian blood on the line. If either the Fund or the companies don’t like how Bolivia decides to handle this, fine. If the companies decide they don’t want to do business here under the terms that Bolivia will demand, that is their choice.

But in the meantime the IMF and the corporations should stop manipulating and pressuring Bolivia from abroad. If people die next week, no matter who fires the gun or who ignites the dynamite, the blood will be on their hands. You can also damn well bet that The Democracy Center – as we did with Bechtel in 2000 and as we just did with our new report on the IMF – is going to document that connection and make it known far and wide.

Update on the Brewing Rebellion Over Gas

As of Thursday night the brewing national confrontation over the gas issue seems to be getting more and more serious by the hour.

It seems likely now that by Monday morning protests coming out of El Alto will start to shut down road access into La Paz, with calls for President Mesa’s resignation and a new gas law that returns control of the country’s petroleum reserves to the government. A national march on La Paz is also set to begin Monday morning at the mid-point between Cochabamba and La Paz. Mesa has convened a national summit for Monday in the city of Sucre (perhaps it is for occasions such as these that Bolivia has two capital cities – one to be blockaded and one to do business in) but it won’t really include a cross-section of the interests and movements involved. The IMF is shoving in private and claiming to be hands-off Bolivia in public.

The endgame in the long battle over gas is afoot and anyone who says they know what the next week will look like in Bolivia is fooling themselves. Here is the full report that The Democracy Center just sent out tonight to our readers around the world. We’ll do our best to keep you updated daily here on the Blog.

Gas War Update

All signs are that Bolivia is once again headed toward a political showdown over the same issue that has ignited this country over and over again for the last two years –how to tax and control foreign oil companies as the nation develops its vast gas and oil reserves.

Last week the Congress passed a gas bill that soon came under attack by foreign oil companies (for taxing them too much) and by various social movements on the left (for giving the companies too much). Yesterday movement leaders announced plans for a major people’s march on the capital, La Paz, to begin Monday. For five days the country has waited to see whether President Carlos Mesa would veto the bill, begin its implementation, or demand changes in it.

Last night in a national address Mesa declared that the gas bill was a recipe for national division and called for a summit of all interests to hammer out a new version of the legislation. Translated this means that Mesa is hoping wildly that another round of high level negotiations will somehow produce a bill that will simultaneously satisfy the social movements enough to keep them from marching, stop the companies from threatening to leave, and stop the IMF from saber rattling with threats to hold up aid if the corporations aren’t happy.

Well, and I also suppose that the Easter Bunny might come to Bolivia this week along with his buddy the tooth fairy (Note: Santa Claus is real so we won’t add him to the list) with large chocolate eggs and perhaps toothbrushes. But that is about as likely as a magic compromise on gas. Aside from the tax issue (the movements want a 50/50 split of revenues with the companies) the real complaint is that the new law still cedes control of the nations gas and oil reserves to the corporations, a concession they won in privatization contracts a decade ago that some legal scholars say are illegal because they were never approved by Congress here.

Mesa’s call for a summit isn’t helped too much either by the fact that the last time a national summit was called, by the Catholic Church and others, a few months ago Mesa decided not to show up at all.

In an hour I will be sitting in on a meeting at which some of the most prominent social movement leaders will be discussing how to respond to the President.

Stay tuned.

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.

Run Evo Run - for Governor of Cochabamba

Granted, it isn’t likely to have the raw star power and political weirdness of my home state electing Arnold Schwarzenegger as chief executive. Nevertheless, the race for governor of Cochabamba is on and it promises to be solid political theater in its own right.

The race to lead the state (not the city) of Cochabamba is historic because up until now the governors of Bolivia nine states (called departments here) have always been appointed by the President. As a result of the demands for “autonomy” during protests in Santa Cruz earlier this year, President Mesa declared that the governors (called prefectos here) will be directly elected.

The governor’s race in Cochabamba is a field of recycled faces, some of them pretty ugly, politically speaking. The party of former dictator-turned-President Hugo Banzer has collapsed, but its remnants have produced two candidates. Jose Orias might better be called “the butcher of Cochabamba”. As Banzer’s man in charge during the Cochabamba water revolt in 2000 he was responsible more than any other for the use of military repression to defend Bechtel, which included the cold-blooded killing of 17-year-old, unarmed, Victor Hugo Daza. Another Banzer alumnus is Tito Hoz de Vila. The last time I spotted him he was shaking hands as a Vice Presidential candidate and then running hilariously away from a voter who offered him some coca leaves to chew.

The other big recycled name is Manfred “Bon Bom” Ryes Villa, the allegedly good looking former Mayor of Cochabamba who’s career highlights include spending the city into massive debt to fund such flashy public works projects as a gondola ride to the tallest Jesus statue in the world. A lot of folks would rather have had drinking water.

The more interesting issue is who will run as the candidate of the Socialist Party (MAS) which came within a whisker of winning the city’s mayorship last year. The state of Cochabamba includes all of the city plus the rural areas of the region which are the most solid political base of MAS leader Evo Morales, the second place finisher for Present in 2002 and a leading candidate for 2007. Speculation in the press centers on Jorge Alvarado, the engineer who took over leadership of the new public water company when Bechtel was kicked out and who was later elected to Congress.

MAS has a real shot at winning the governorship. I wish that Evo would run himself. It is not that I am a big Evo fan. The farther away you get from Bolivia the more romantic his image becomes. The closer up the more you get first hand reports of the same warts that any political leader has.

It is more that, if Evo is going to grow as a national leader and of the political left is going to become a viable governing party, Morales and his party need to show that they can actually govern something besides the coca growers union and a political party. It would be great to see the department of Cochabamba become a place where alternative ideas as well as MAS get put to the test.

Two decades ago, now Brazilian President Luiz Inacio Lula da Silva was just as much an outsider and just as feared by parts of his country as Evo Morales is in Bolivia today. His Labor Party built itself up by slowly winning political control of cities and states and steadily learning the difficult task of actually governing and demonstrating some solid successes.

I’d like to see Evo and MAS take the same route. Long before I turned my attention to advocacy I served in government, as an aide to the California Legislature. Solving policy problems in the real world and learning when to compromise and when not to is a vital skill. There is only one way to learn it – governing. Cochabamba would be a good place for Bolivia’s left to begin doing that.

Mexico’s President Pays a Visit – Step on the Gas

Mexico's President, Vicente Fox, dropped into Bolivia for a 24 hour visit Tuesday and the subject wasn't salteñas, it was gas. The timing of Fox's visit was not coincidental.

Bolivia, as I have written here many times over the past couple of months, is in the endgame in a national debate over what kind of deal it ought to cut with foreign oil companies regarding development of the nation's vast gas reserves. Bolivian President Carlos Mesa is pushing a deal much more favorable to those companies than the 50/50 profit split making its way through the Congress.

Hurry Up and Cut a Deal

Bolivia watchers may recall that is was a proposed sale of Bolivian gas through Chile to Mexico, and from there onward to California that sparked the protests in October 2003 that ultimately led to the ousting of President Gonzalo Sànchez de Lozada. Fox's visit is interesting timing.

It was that same Mexican gas deal, and the fear of losing it, that led then-President Sànchez de Lozada to turn to taxes on the poor instead of foreign oil companies in the run-up to Bolivia's bloody Febrero Negro [see The Democracy Center report].

The message communicated by the two Presidents, to Bolivian social movements and the Congress, could not have been more clear step on the gas, either pass a new export law or risk losing the deal. Fox talked about time limits inherent in the market. Mesa spoke about a new gas law making "negotiation [of a deal with Mexico] something viable."

A Few Points Worth Remembering

Here's a few points of reality worth remembering in all this.

First, Bolivia should absolutely export its gas. Doing so is one of the few real opportunities the nation has to lift itself up out of dire poverty.

Second, the vast majority of Bolivians, including the political leaders most at odds with foreign oil companies, also believe that Bolivia should export its gas and use the money to promote anti-poverty efforts.

Third, foreign oil companies are going to play some role in the development of Bolivian gas and even their harshest critics admit this.

The real issue is, in the end, how the government and the companies split the take. It is clear that some of the interests involved (the companies, to name one) would like to create an atmosphere of "better hurry, better hurry, the door is slamming shut." That's a fine tactic if your aim is to get a deal most favorable to the likes of Shell, British Petroleum and the others involved.

Most Bolivians, I think, do want a gas deal but they also want a good one. Good, in this case, means not getting ripped off, yet again, in the sale of their natural resources. The gas has been under the ground for a few million years or so. The world is also clearly running out of petroleum supplies and the demand for Bolivian gas is not likely to evaporate as time marches forward. How Bolivia decides this issue will determine its economic future for many decades.

I am reminded of a recent experience in which I tried to stake the tomatoes growing in my garden on the fly one morning, with whatever bits of wood I could find about the house. Each time, the tomatoes just fell back to the earth and into the waiting jaws of worms. Eventually it dawned on me that it was worth the time and effort to get it right. So, if you come on by I'll share some of the best, pesticide-free cherry tomatoes you ever ate.

The moral? Gas laws, like cherry tomatoes, turn out best when they are tended to seriously and allowed to fully ripen. Bolivians aren't interested in a gas export deal that ends up tasting like a green tomato, or one inhabited by hidden worms. President Fox may just have to wait a bit longer for his Bolivian gas.

Book Presentation in Cochabamba this Thursday

I am happily back in Bolivia after my travels to the US. This week The Democracy Center will host its first of two public presentations of our new book on the IMF in Bolivia, Deadly Consequences, here in Cochabamba. This one will be in English. We will do another in Spanish in a few weeks after the Spanish translation is completed.

Here are the details. If you are in Cochabamba this week please join us!

DEADLY CONSEQUENCES -- THE INTERNATIONAL MONETARY FUND IN BOLIVIA

Thursday, May 5, 2005 – 7:30pm

La Republica -- 342 Ecuador
(between @25 de Mayo y España)

Jim Shultz will speak about The Democracy Center’s new book on the IMF and Bolivia’s Febrero Negro. Based on interviews with President Carlos Mesa, IMF officials, Bolivian human rights leaders, eyewitnesses and many others, the book traces the connection from IMF policy to 34 deaths in La Paz.

From the Introduction to Deadly Consequences:

Through the large windows of the International Monetary Fund's office in La Paz you can see down to the rooftop where Ana Colque was shot and killed in February 2003. Army sharpshooters sent a bullet through her chest during a military assault intended to quell public protests against an economic belt-tightening package imposed on Bolivia by the IMF. Colque, 24, was among thirty-four people killed during two days of violent conflict sparked by the announcement of a new tax on the nation's working poor.

Admission Free -- Refreshments Available