by Gerry Foley / May 2006 issue of Socialist Action newspaper
Coinciding with May Day, the government of Evo Morales in Bolivia, who was elected in January on a the back of a wave of radicalization, issued a decree calling for a state takeover of the oil industry and sent troops to occupy the oil fields. The decree requires the foreign oil companies to accept minority partnerships with the state oil administration.
Preceding this, Morales adhered to the Bolivian Alternative for Latin America (ALBA), a economic cooperation treaty initiated by Cuba and Venezuela. The agreement on which Bolivia’s adhesion to the pact was based includes pledges of important financial and technical aid from Venezuela, as well as medical and technical aid from Cuba.
ALBA calls for trade relations based on solidarity and social development rather than profit, which would require more radical economic transformations in both Bolivia and Venezuela.
In fact, the political promise of the Bolivian government’s moves far exceeded their immediate economic importance. An article on the website of the Arab network, Al Jazeera, pointed out May 2: “Even in producers such as Saudi Arabia, where there is no legislation severely constraining oil firms, foreign oil companies in general are obliged to form partnerships with local enterprises….”
The French newspaper of record, Le Monde, reported May 3: “The Bolivian expert Carlos Miranda estimates that the May 1 presidential decree is in direct continuity with the hydrocarbons law adopted in May 2005 before Evo Morales’ election: ‘The main innovation is the taxes imposed on the natural gas deposits in the San Alberto and San Antonio Sabalo fields, which will go from 50 percent to 82 percent. These fields produce half of Bolivia’s natural gas, but the new tax will apply only for a period of 180 days during which new contracts will be negotiated with the operators, after audits.’”
Morales’ minister of hydrocarbons, Andres Soliz Rada, told El Mundo (May 4) the major paper of the right-wing-dominated Santa Cruz province, “The government has maintained the 50-50 ratio for fields that produce less than a hundred million cubic feet, although there are smaller and marginal fields that may not be able to afford a 50 percent tax, and the rate there may be set at 30 for the state and 70 percent for the companies.”
The right-wing community organizations in Santa Cruz had called a general strike to protest Morales’ actions. But they called it off, El Mundo of May 5 reported, after talks with government representatives. One of the demands they presented was for the huge iron and manganese deposits at El Mutun to be turned over to a private company, and the Morales government agreed.
The Bolivian website Econoticias reported May 4: “Jaime Santa Cruz, vice president of the Comite Civico pro Santa Cruz, described the [May 1] meeting that he had with the president and vice president of the country as fruitful: ‘The government has guaranteed that bids for El Mutun will go ahead and that the winning enterprise will be announced before May 30. This leaves us and the entire country content, given what this license can bring.’”
An article on the oil industry takeover in the Christian Science Monitor of May 5 noted: “ALBA promotes the principles of social and economic justice, but so far is known more for its symbolism than concrete action.” But as “symbolism” it appeals to the mounting aspirations for independence and social development in Latin America, and with the adherence of Bolivia, ALBA begins to assume the character of a regional alliance against imperialism and a major breakthrough for Cuba out of its isolation.
The economy of Cuba is publicly controlled and devoted to building socialism. However, the economies of Venezuela and Bolivia remain capitalist. In both countries, the governments have compelled the oil companies to accept minority partnerships with the state companies. But the private oil companies will be allowed to continue to operate as capitalist enterprises.
The foreign oil companies with the biggest stake in Bolivia are the Spanish Repsol, a private company, and the Brazilian Petrobras, a state corporation in which the state holds the majority of voting stock but private companies hold the majority of the capital.
The Bolivian vice president, Alvaro Garcia Linera, held a joint press conference with representatives of the Spanish government. According to the Mexico City daily La Jornada of May 6: “He [Linera] noted that between 1990 and 1997, when the [state corporation] Yacimientos Petroliferos Fiscales Bolivianos had control of the production of natural gas, the income for the general treasury of the nation, with a smaller state enterprise, was between 370 and 380 million dollars.
“He explained that when foreign investors came in, they claimed to have invested $3 billion. They then discovered new fields. A market was opened up in Brazil and the volume of production was increased for the domestic market. And between 1997 and 2003, the income for the state was $390 to $400 million, a difference of a little less than 20 million.
“‘Does that seem just to you?’ Garcia Linera answered a journalist. ‘That is why we adopted a hydrocarbon law and why we nationalized, because we think that the state’s income should be greater, without depriving foreign investors of legitimate profits, which, on the basis of the studies we have, we intend to guarantee.’”
The La Jornada article continued: “The Bolivian minister of planning, Carlos Villegas, told a Spanish radio station … that foreign oil companies ‘would maintain a 20 percent profit margin, as well as recovering their investments.” The usual estimate of a normal profit in international dealings is 7 percent.
The Brazilian company Petrobras controls 45 of Bolivian natural gas and part of a pipeline that supplies 51 percent of the country’s consumption of natural gas. Brazil’s president Ignacio Lula, himself lifted into office by a wave of revolt against imperialist-dictated economic policies, announced that he accepted the Bolivian move.
La Jornada reported May 6: “In a rally held in Almores, in the state of Minas Gerais, Lula expressed his confidence that ‘Bolivia is going to fulfill its contracts with Brazil’ in the field of energy. He also said that he had no doubt that “gas is not going to go up, and if it does Petrobras will absorb the increase.”
However, given the very low price at which Bolivia has been selling natural gas to Petrobras, the Brazilian semi-state corporation is likely to have to absorb some substantial cuts in its profits that it may not be so easy to get its private investors to accept.
In the summit of regional presidents, including Hugo Chavez, held in the Argentine city of Puerto Iguazu on May 4, La Jornada of May 5 reported that Bolivia agreed to guarantee supplies of oil and natural gas to Brazil and Argentina and to negotiate the prices with them. Chavez announced that Bolivia has adhered to the project of building a pipeline that would link his country to Argentina. The various presidents pledged to further Latin American economic integration.
Overall, the Bolivian takeover of the petroleum industry has undoubtedly given a significant boost to economic nationalism in Latin America. However, experience has demonstrated that economic nationalism within the framework of capitalism cannot long be sustained against the imperialist domination of the world market. Thus, the main hope of these measures is that they will help to inspire the oppressed and exploited masses to throw off the yoke of capitalism, as the Cubans did in 1959-60.
There has been no indication, however, that Morales is prepared to move in this direction. He was elected as a result of the impact of mass uprisings in 2003 and 2005 in which he and his party did not participate. After his election, he temporized on the question of nationalizing the hydrocarbons.
An article in the May 3 Le Monde quoted a Bolivian political analyst, Jorge Lazarte, who explained that in March and April Morales’ approval rating in the polls dropped precipitously by 12 percent, undoubtedly in response to his failure to meet his campaign promises.
The British Guardian’s correspondent in Santa Cruz tried to take a sampling of public opinion. “‘It’s been up and down,’ says José López, a Santa Cruz native. ‘For the first 100 days of his rule, Evo didn’t do the things he said he would. But this was much better. Now everyone is behind him again.’”
On the eve of his decree, moreover, Morales faced a day of protest called by the national labor confederation, the COB, to demand nationalization of the hydrocarbons and a substantial increase in the minimal wage instead of the minor one Morales had instituted. Morales’ initial response to the protest was repressive, including using the state information agency to put out false information and sending members of his party to break up the COB demonstration in La Paz.
Moreover, radical union spokespersons complained that Morales was mounting a campaign by his party to capture the unions. That would be in line with the usual strategies of populist politicians in Latin America who have balanced between the bourgeoisie and capitalists. They need the support of the workers, but they also need to control them.
One of the most hopeful signs about Hugo Chavez, for example, is that he has not taken this course. The radical union federation in Venezuela, the UNT, is not directly controlled by Chavez or his party, although it supports him. Revolutionists have a substantial influence in it.
At the moment, Morales has clearly isolated his leftist critics. Their criticisms have been drowned out by the joy of the Bolivian masses, especially the long humiliated native people, at the recovery of some control over their natural resources. It is a joy that all democratic-minded and progressive people should share.
However, the fact that Morales finally took the step of taking control of the oil industry does not mean that his left critics in the COB and other mass organizations were wrong in not giving him political confidence in the elections. Indications are that the fact that they maintained their independence of him and his party, and maintained the demand for the nationalization of the hydrocarbons, was decisive in assuring that he took his step. If they had given him confidence, the pressure on him would have been less.
The ability of the revolutionary left in Bolivia to maintain and build up workers and mass organizations independent of Morales and the MAS will almost certainly be decisive for moving the break with imperialism forward. In this respect, moreover, the experience of the Bolivian takeover demonstrates that the growth of revolutionary movements in Argentina and Brazil in particular will have a critical importance.