A Bolivian dilemma

A Bolivian Indian woman at a protest meeting at La Paz. - DAVID MERCADO/REUTERS

The restive Indian majority in Bolivia, which forced the President out, would settle for nothing less than the nationalisation of the country's hydrocarbon resources, while the next government would find it hard to pay the hefty compensation.

PEOPLE'S power was once again on show in Latin America. In the past five years, eight Latin American Presidents have been forced out of office before the expiry of their terms. Bolivia's President Carlos Mesa, who had been in office since October 2003, was forced to step down on June 6 after massive street protests paralysed the capital La Paz for more than three weeks. His predecessor Gonnzalo Sanchez de Lozada fled into exile following massive street protests against his move to export Bolivia's natural gas to the United States market. The government had at that time used force against the protesters, resulting in the death of more than 60 of them. This time not a single protester died though tear gas and rubber bullets were used in plenty by the security forces. The outgoing President noted this with pride in his farewell speech to the nation.

The protests were once again sparked by controversy surrounding the huge gas reserves of the country. President Mesa's announcement in August 2004 of a deal to export natural gas to Argentina infuriated the Opposition, which took the stand that the decision went against the result of the referendum on the hydrocarbons law. The referendum approved the cancellation of many of the contracts the previous government had signed with multinational companies. Left-wing parties and organisations in the country want oil companies to pay 50 per cent royalties for oil and gas extracted from Bolivia's territory. This was the amount paid to the state before 1994. In that year, Bolivia's Congress, during Sanchez de Lozada's first term in office, changed the law in favour of the multinationals.

The protesters, mainly of indigenous descent, are against the privatisation of the country's natural resources as demanded by the International Monetary Fund (IMF) and other international aid agencies. Bolivia's natural gas reserves are the second largest in the hemisphere after Venezuela's. It is estimated to be at 53 trillion cubic feet. The other major demand of the protesters was the rewriting of the Bolivian Constitution in keeping with contemporary realities. The populace has seen its living standards plummet as a result of the IMF/World Bank-prescribed policies, dutifully implemented by successive governments.

Bolivia was one of the first countries used by the IMF to test its "shock therapy" liberalisation policies in the mid-1980s. The result is that one-third of the people today live on less than $1 a day, whereas the oil companies have made their billions by exploiting the country's abundant resources. Bolivia's debt is among the highest among countries in the hemisphere, and 40 per cent of the fiscal expenditure is devoted to its repayment. The bulk of fertile land and mineral resources are controlled by the minority white and Metziso elite, concentrated in the eastern part of the country. In recent months there has been loud talk of the country splitting up, with the richer eastern part going its own way. This talk of secession comes at a time when the indigenous people, who constitute more than two-thirds of the population, are for the first time demanding a meaningful share of economic and political power.

History has shown that the elite misappropriated the huge mining reserves the country had since the time of Spanish colonialism. The protesters, who brought La Paz to a standstill for more than three weeks, consist of many Opposition groups and associations of coca growers, mineworkers and students. They do not want history to be repeated in the case of the gas reserves, which were discovered in such abundance only in the last two decades.

Another sore point with the protesters is the U.S.-sponsored war against "narco-terrorism", which in Bolivia involved the targeting of coca cultivators, most of them ordinary peasants. Traditionally, coca has been cultivated by the Indians. Coca leaf is a mild narcotic and is a hunger stimulant. For the last six years, many parts of Bolivia have been in the grip of a low-level insurgency. According to human rights organisations, peasants engaged in coca cultivation are routinely arrested and tortured. The U.S. gives the Bolivian security forces more than $90 million annually for the war against drugs.

Today, one of the most popular political figures in Bolivia is Evo Morales, the leader of the Movement Towards Socialism (MAS). In the last elections, he came a close second to the eventual winner, Sanchez de Lozada. If elections are held as scheduled later this year, he may well emerge as the leader of the country. Bolivia could join the ranks of the growing number of countries that have come under the sway of the Left in Latin America.

There was plenty of drama in the days preceding the transfer of power from the outgoing President to the President of the country's Supreme Court. The next in line for the presidency was the Head of the Senate, Homando Vaca Diez, a rich hacienda owner from the eastern part of the country and a representative of a discredited political party which had very little popular support. Initially, Vaca Diez had insisted until the eleventh hour on assuming the presidency despite warnings from well-meaning political figures and the outgoing President that such an act would precipitate more political chaos. Vaca Diez, on the other hand, kept issuing warnings of his own that if he were not allowed to assume the presidency it would lead to the return of the armed forces into politics.

The Bush administration was also busy playing its own games. At the Organisation of American States summit held in Florida in the first week of June, it blamed Venezuela's President Hugo Chavez for fomenting trouble in Bolivia. It is no secret that Bolivian Left-wing leaders such as Morales are admirers of the Venezuelan leader and his policies. However, nobody in the region has taken the U.S. accusations seriously. Chavez said that the economic travails of the people of Bolivia were caused by the "free market policies" imposed by the American government. Chavez, in fact, used his influence with leaders of the indigenous groups to facilitate the smooth transfer of power during the recent crisis.

Vaca Diez formally gave up his claim on the presidency, allowing Eduardo Rodriguez, the Supreme Court President, to become the interim President until elections are held by November. The Constitution would have allowed Vaca Diez to rule until late 2007, when Carlos Mesa's term was to expire legally. Morales had described Vaca Diez as part of the "mafia of the oligarchy". He had warned that if Vaca Diez insisted on assuming the presidency, the street protests would continue.

After the election of the interim President, calm once again returned to the Andean state. The political parties are gearing up for elections. The political vacuum in Bolivia is not to the liking of its neighbours. Brazil, Chile and Argentina have invested heavily in the hydrocarbon sector of the country. Latin American governments would not mind the nationalisation of the Bolivian oil and gas sector provided they are assured of uninterrupted supplies. However, many foreign oil companies have threatened to go to court demanding compensation in case of re-nationalisation.

The previous government had signed investment protection agreements with companies from Argentina, Britain, France and Spain. It will be a tough call for the next elected government. With the treasury empty, the country is in no position to pay hefty compensation to foreign companies in lieu of nationalisation. On the other hand, it is clear that the restive Indian majority will settle for nothing less than re-nationalisation of the vast hydrocarbon reserves. Venezuela, where the revenues generated by oil are being pumped into the social sector, is a model for many countries in the region.