Published: Tuesday, May 02, 2006

www.vheadline.com/readnews.asp?id=55730

VHeadline.com commentarist Arthur Shaw writes: Bolivian President Evo Morales issued an executive order Monday, May Day, nationalizing Bolivia’s oil and natural gas resources. At this moment, “nationalizing” seems to mean seizing majority control of ownership from foreign oil and gas investors and taking over immediate operational control in Bolivia from these foreign companies.

At the moment, the foreign companies seem to retain a considerable ownership and operational stake in Bolivia’s energy industry.

At the same time that Bolivia seized legal control of the country’s huge natural reserves, Bolivian army troops occupied two refineries run by the Brazilian state oil company. The deployment of troops, the Morales government explained, “seeks to ensure the functioning of oil facilities to guarantee the normal supply of energy in accordance with international agreements as well as to fulfill domestic needs.”

• It is however widely suspected that the Brazilians and the Bolivians have reached some kind of “sweetheart” understanding concerning the nationalization.

By this move Evo Morales keeps his word to the Bolivian people, Morales was elected December 18, 2005, on a pledge to take a bigger share of earnings from Bolivia’s vast energy resources for South America’s poorest country. The Bolivians estimate that the May Day measures will generate some $300 million in additional revenue in 2007 and the foreign companies will still make a handsome return of their capital.

Actually, if energy prices climb as expected as a result of Bolivia, Iran, Iraq and, etc., May Day in La Paz should surely generate a lot more than $300 million and a very attractive return indeed for the imperialist oil companies.

Bolivia has the second highest natural gas reserves in Latin America, behind Venezuela. It has an estimated 54 trillion cubic feet of natural gas reserves, according to official data. In today’s demand-side environment, reserves of that magnitude do not leave the oil companies a lot of either wiggle room or jawboning leverage, if the government in La Paz refuses to back down under imperialist pressure.

Bolivian soldiers also occupied 54 gas stations owned largely by the Bolivian bourgeoisie. Perhaps this occupation was intended to discourage treachery and panic by imperialist quislings in Bolivia, who would love to disrupt domestic fuel supply as a protest against the nationalization.

Starting Monday, May 1, foreign oil companies will have to deliver all of their production to the state-run oil and gas company, or YPFG, for distribution and processing and they will have 180 days to adjust their current operating contracts or leave the country. Morales said the state-owned YPFB would be responsible for all oil and gas production and sales, as well as prices, in the industry. However, once the details of the new order are ironed out, the YPFB may return some or all of the functions to the private operators.

What seems to be the case here is that the oil companies did not take the Bolivian government seriously when it demanded a fair cut of the oil and gas profits and royalties to lift the standard of living of the Bolivian people.

• The foreign seem to believe that the new government in La Paz was joking or posturing to please its constituency.

Now, finally, with the seizure of legal control of the foreign companies and the military occupation of the major producing fields, the government at last has the full attention of the exploiting companies from abroad.

Perhaps, in the next 180 days, the oil companies will get real and negotiate in good faith.

President Evo Morales announced the acquisition of enough of the oil firm’s shares so that YPFB will have more than 50% ownership of the foreign companies. The press release speaks about “more than 50% ownership,” but does not specify how much more. If the acquisition is close to 50 percent, then Bolivians are being really modest or generous toward foreign investors. The foreign companies can easily make a respectable or fabulous profit with only a 40% stake.

• Morales said, during his May Day address, that all the country’s oil and gas fields will be occupied by the army’s battalion of engineers and by YPFB officials. Of course, the foreign and domestic technicians are expected to remain in place while the details of the new order are ironed out.

Operating in Bolivia, besides Repsol YPF and Petrobras, are the foreign energy firms BG, BP, Total, US Panamerican Energy and ExxonMobil, Argentina’s Pluspetrol, Canadian Energy and South Korea’s Dong Wong. In all, the May Day measure is expected to affect about 20 foreign oil companies.

How will Brazil and Argentina respond to May Day?

Both Brazil and Argentina are potentially big winners if the May Day move thins out the field of foreign operating companies in Bolivia. But US imperialism will demand that Brazil “unite” with the cry babies companies … which have mercilessly looted Bolivia … that will inevitably go running to the GOP regime in Washington, begging for assistance.

It’s unlikely that Argentina will in any way or to the slightest degree miss out on this splendid opportunity. But Brazil may be torn. Expect the conniving and instigating Rice or Rumsfeld or someone like that to rush to Brazil to obstruct the implementation of any “sweetheart” pact between Brazil and Bolivia.

How will US imperialism respond?

• Easy. It will step up its saber-rattling.

How will the Peruvian electorate respond?

May Day is a Godsend for Ollanta Humala … the electorate is sick and tired of lying politicians who promise to stand up against US imperialism, but sell out within hours of their election.

Morales’ move on May Day, attempting to do in a few months what took Venezuelan President Hugo Chavez five years to accomplish, demonstrates once again that cowardice is not always the defining characteristic of today’s leaders in Latin America.

But Humala has to embrace the anti-imperialist move in Bolivia.

If he waffles or resorts to double talk, then he may throw away his best chance to win.

Arthur Shaw

arthur@vheadline.com

www.vheadline.com/shaw