Nationalization Update
Recently Bolivia forcibly occupied its natural gas fields, forcing foreign energy companies to agree to new contracts within 6 months or lose the fields altogether. The proposed contracts would give the Bolivian government majority control. Thus we see nationalization in slow motion, a large step backwards for the region and the world.Interestingly, one of the biggest players in Bolivia is Petrobras, which is the state-run energy company of Brazil. Brazil's president, Luis Inacia Lula de Silva, was elected in 2002 on a leftist platform similar to Evo Morales (new president of Bolivia). This poses a dilemma: what to do when one leftist government nationalizes natural gas fields owned by another leftist government? It's kind of a Catch-22, because the "greedy foreign oil companies" in this case are owned by your ideological comrades. Hmmmm... For answers, we will have to wait and see - as de Silva, hoping to avoid further trouble, has made conciliatory statements after initially expressing alarm at the measure.
One thing is certain: prices will rise:
Firms have 180 days to renegotiate energy contracts with the Bolivian state,
which experts say will likely lead to price increases. During that time, the
companies which own the two largest oil fields will absorb a 32 percent hike
(82 percent total) in royalties and taxes.
Meanwhile, the Three Amigos strike again:
Just before the May 1 decree, Morales met with Chávez and Castro in Havana to
sign a socialist trade agreement that made Morales a member of the Bolivarian
Alternative for the Americas. The three are now calling it the "Axis of Good," a
pact originally signed by Chávez and Castro last year. Morales and Chávez
threatened to pull out of the Andean Community if
Colombia, Peru, and Ecuador sign free trade agreements with the United States.
Castro and Chávez also said they would become Bolivia's primary soybean
importers. This plan may affect Brazil, because Morales has set a May 31
deadline for land redistribution in the Santa Cruz region, where Brazilian
farmers grow more than a third of Bolivia's soybeans and have invested heavily
in land and agriculture.
It is sad to see Latin America giving up on market capitalism, even as its thug leaders profit to an unprecedented degree. As a for instance, Castro is purported to be worth approximately $900 million dollars. He has starved and brutalized his own people for 40-odd years now, but at least he's comfortable. Who will stand up to him?
posted by JM @ 4:55 PM
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