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BOLIVIA: Deep Division Over Referendum on Natural Gas

LA PAZ - A succession of ministers of mining and hydrocarbons in Bolivia have attempted to lead the process of reforming the laws governing the industry, since the country's president was forced to step down late last year by protests over natural gas policy.

But each minister has found himself trapped between the popular demand for the re-nationalisation of the sector, or at least an increase in the state's share of gas export earnings, on one hand, and the terms of the 78 contracts signed with foreign oil firms on the other.

President Carlos Mesa, who replaced Gonzalo Sánchez de Lozada after a month of protests and unrest last October, is determined to hold a referendum in July for voters to decide on questions like the re-nationalisation of the partially privatised oil and gas industry and the portion of revenues that should go to the state.

Every attempt to draw up a new legal framework setting the conditions under which foreign oil companies operate in Bolivia, which has Latin America's second-largest gas reserves after Venezuela, has cost Mesa a minister. Last week, he named his fourth minister of mining and hydrocarbons in just six months.

But he is determined to overcome the criticism and obstacles raised by his opponents and hold the referendum as scheduled on Jul. 18, as demanded by the country's trade unions and other social organisations.

''The focus of national and international attention is on our hydrocarbons policy and the referendum, and is thus subject to the storm, which is legitimate of course,'' Mesa said last week when he designated then superintendent of hydrocarbons Guillermo Torres to replace Xavier Nogales as minister of mining and hydrocarbons.

The ministry is hemmed in by intense pressure from all sides. The labour movement and social activists are pushing for an overhaul of the country's natural gas policy, while the transnational oil corporations insist on full respect for the contracts under which they are now operating.

Under the terms of the concessions, the foreign energy firms pay the state just 18 percent of exports of natural gas, the country's chief foreign exchange-earner.

Nogales, who was the driving force behind the liberalisation of the economy under the governments of Víctor Paz Estenssoro (1985-1989) and Jorge Quiroga (2001-2002), resigned on May 24 at the president's request, after criticising the questions to be put to voters in the referendum as overly vague and confusing.

The former minister complained that the way the questions are worded, the referendum actually induces Bolivians to vote ''yes'', in favour of the re-nationalisation of the oil and gas industry.

Since Mesa became president on Oct. 17 after Sánchez de Lozada was toppled by protests triggered by popular opposition to government plans for exporting natural gas to the United States and Mexico through a Chilean port, three ministers of mining and hydrocarbons have resigned: Alvaro Ríos, Antonio Araníbar and Nogales.

Ríos handed in his resignation voluntarily after it was announced that he would be called to parliament to be formally questioned, at the initiative of the Movement to Socialism (MAS) party, which is demanding an aggressive policy to put the country's gas and oil resources firmly back into state hands.

His successor, Araníbar, waged verbal battles with Nogales over the government's oil and gas policy, and was accused of taking an overly passive stance towards the start of operations by foreign oil companies in 1994, when he was minister of foreign relations.

Nogales, for his part, enjoyed the support of the multilateral lending institutions, the private banking sector, and the business community.

As president of the Central Bank, he was one of the architects of the economic plan that floated the local currency during the fourth term of president Víctor Paz Estenssoro in the second half of the 1980s, which preve nted a repeat of the runaway inflation that plagued the country between 1980 and 1985.

Torres, his successor, has a long trajectory in the state oil industry, and as superintendent of hydrocarbons was known for his strict supervision of the industry and for taking measures against companies that exported liquefied gas at prices below those charged on the domestic market.

Torres is expected to seek to reconcile the interests of social and business groups, with the aim of creating an environment conducive to holding a conflict-free referendum.

The questions that Bolivia's voters, approximately four million adults over 18 in this country of 8.2 million, will be asked are the following:

1 - Do you agree that Hydrocarbons Act 1689, promulgated by Gonzalo Sánchez de Lozada, should be repealed?

2 - Do you agree that all hydrocarbons should once again become the property of the state?

3 - Do you agree that the (state oil company) Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) should be refounded, putting the shares owned by Bolivians in the capitalised oil firms back into state hands, to allow YPFB to participate in every step of the hydrocarbons production chain?

4 - Do you agree with President Carlos Mesa's policy of using gas as a strategic resource to achieve a useful and sovereign outlet to the Pacific Ocean?

5 - Do you agree that Bolivia should export gas under a national policy that would guarantee the gas consumption needs of Bolivians; foment the industrialisation of gas in national territory; charge foreign oil firms taxes and/or royalties of up to 50 percent of the value of the production of gas and oil; and mainly allocate revenues from the exportation and industrialisation of gas for education, health, roads and jobs?

Bolivia's trade unions reacted angrily when presidential delegate Francesco Zaratti recently stated that there was no possibility of revising the contracts between the government and foreign oil firms.

The main trade union confederation, the Central Obrera Boliviana (COB), announced that it would extend its current general strike, so far only adhered to by public education teachers and a few rural workers' unions, indefinitely, with the aim of re-nationalising the country's oil and gas resources.

But the Mesa administration argues that the re-nationalisation of the oil industry is not feasible because the state would have to pay eight billion dollars to compensate the corporate oil giants that have invested around 3.5 billion dollars in the country since 1997, when the oil and gas industry was ''capitalised'' or partially privatised.

''The country is strongly divided, and the demands are diametrically opposed,'' energy industry analyst Carlos Villegas told IPS.

But despite the conflicting demands and adverse environment for holding a popular vote, the referendum is not a ''gift'' from the government, but a social conquest that was won at a high price, and it must take place, he argued.

A popular vote on the use of this impoverished nation's abundant natural gas resources was one of the demands set forth by the trade unions and other social organisations that staged the September-October 2003 protests that toppled Sánchez de Lozada and left at least 70 protesters dead, according to human rights groups.

''The referendum represents a deepening of democracy, and political and social opinions must not divide the country,'' social affairs analyst María Teresa Zegada commented to IPS.

The questions to be contained in the referendum ''reflect the October demands and are based on opinion polls,'' she maintained.

But Villegas said there would be a problem when Congress begins to study the law for convening a referendum.

He said an obstacle to the referendum would be raised, because the Pro Santa Cruz Civic Committee, a powerful organisation that defends regional business interests in the eastern part of the country, plans to argue that the questions to be contained in the national referendum should previously be debated and approved by consensus in Congress.

Mario Kiesen Brieger, president of the Private Business Federation of Tarija, the southern department where the biggest volumes of natural gas are located, described the referendum as ''absurd'', and predicted continued social conflicts.

Villegas also said there would be increasing mobilisation by the trade union movement, led by COB, which is demanding that the foreign oil firms pull out of Bolivia and hand the privatised installations and oil and gas fields back to the state.

The analyst observed that if the government decides to respect the contracts under which concessions were granted, Bolivia will not recover full ownership of the oil and gas fields until 2036.

Editorial Notes: The stakes are high with Bolivia a potential exporter to the US where a natural gas crisis is expected to hit soon. For more info on the North American natural gas crisis see: planetforlife.com/gasroot.htm

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