Morales's government shifts to right

Issue:
Posted: 27 September 06

Translated from Econociasbolivia 15 September 06

La Paz.– Minister Soliz Rada has fallen. Now the team negotiating with the oil companies on behalf of Bolivia consists of two former Petrobras (Brazilian oil multinational) employees, a hard-working IMF pupil and an ex-army officer linked to US-funded organisations.

In a clear shift rightwards, acting President of Bolivia, Alvaro García Linera, ended today by dismantling Evo Morales’ oil “nationalisation” team. He sacked Hydrocarbons Minister Andrés Soliz Rada, replacing him with the Minister who privatised the giant iron-ore deposits in the Mutún mountain.

Soliz Rada was forced to resign, which he did by the afternoon, after García Linera had revoked his decision to put back under state control the refineries awarded to Petrobras, Repsol and Total.

García Linera, who is temporarily standing in for Morales while the latter attends the summit of non-aligned nations in Cuba, took the decision after telephone protests from the Brazilian President, Luiz Inácio Lula de Silva.

Chronicle of a fall foretold

Since late August, Soliz Rada had lost direct control over Bolivia’s hydrocarbon policy and negotiations with the oil corporations. These are now the responsibility of García Linera and four other Ministers in Morales’ cabinet. Their stance is more conciliatory and far more pro-business than that of Soliz Rada, who had publicly denounced fraud and other crimes by Repsol, Petrobras and Shell in order to improve his bargaining position. His fall was predictable, as was the replacement of his policy of verbally confronting the oil companies with that of seeking immediate agreements at any cost.

Carlos Villegas has been appointed Hydrocarbons Minister and has taken office tonight. Villegas is the ex-Planning Minister and person directly responsible for the Mutún privatisation and the huge subsidy in natural gas (worth at least 100 million dollars) that Bolivia is to give the trans-national Jindal for it to exploit the biggest iron-ore deposits in the world.

Furthermore, the replacement of Soliz Rada by Villegas confirms the change in direction undergone by the hydrocarbons sector since mid-August. This began with the removal from office of the ex-president of the Bolivian state oil company, Jorge Alvarado, the Hydrocarbons Superintendent, Victor Hugo Saínz, and the Hydrocarbons Vice-Minister, Julio Gómez. All of these have extensive knowledge of the oil issue and are loyal to Evo Morales.

Shift to the right

After disbanding the first oil team –which had made very little headway in negotiating contracts with the trans-nationals (which must ratify their permanence in Bolivia before 1 November or leave the country)- President Morales formed a new team. This was headed by Vice-President Alvaro García Linera and four other Ministers, and represented a clear turn towards a more moderate and right-wing standpoint, as it sought immediate reconciliation with foreign oil interests.

The team negotiating the new contracts with the foreign oil companies is made up of the following: the new president of the state oil company, Juan Carlos Ortiz, who has extensive experience in the sector as he was Petrobras’ sales manager; the Minister of Defence, Walter San Miguel, ex-lawyer of Petrobras and loyal servant to the Bolivian and Brazilian businessmen involved in cases of embezzlement; the Chancellor of the Exchequer, Luis Alberto Arce, a bureaucrat moulded at the IMF and World Bank school; former Planning and Development Minister and current Hydrocarbons Minister, Carlos Villegas, a university professor and researcher on non-governmental organisations; and the Prime Minister, Juan Ramón Quintana, the ex-army officer specialising in continental defence and member of Resdal –an organisation funded by the US-based National Endowment for Democracy, set up by Ronald Reagan to fight communism and the left.

Negotiating in the dark

This team is negotiating for Bolivia with foreign trans-nationals under precarious conditions, in the dark, and with almost predictable results. With incomplete audits, under-qualified negotiators and legislation with large loopholes, the Bolivian government is negotiating against the clock at a clear disadvantage. With their new contracts, the oil trans-nationals will continue to exploit the second largest gas and oil reserves in South America.

The government’s aim is to advance as much as possible until 1 November in its self-proclaimed “nationalisation” process. “Nationalisation”, in the absence of any expropriations, means the re-negotiation and authorisation of contracts for foreign oil corporations. Through this they will pay slightly higher taxes in exchange for full guarantees to continue exploiting deposits valued at 200 thousand million dollars.

One of the biggest weaknesses is the almost complete lack of full and solid audits for the investments and operations performed by oil corporations during the granting of licenses by neo-liberal governments. Such audits are now being performed by private consortiums specialising in the hydrocarbons field and with strong past links with the corporations they are now investigating. Some of them even have a murky past, such as Consult System -which was previously condemned by the Bolivian authorities due to falsifying documents. Consult Sytem is the company responsible for auditing the Colpa and Caranda oilfields in which Petrobras operates.

According to a hydrocarbons ministerial report, made public this weekend, the Bolivian government has as yet only received two preliminary reports out of the 11 audits commissioned.

Legal loopholes

Another big weakness in the negotiations is the lack of regulations in the current Hydrocarbons Law (3058)—passed in May 2005 by the neo-liberal Congress and approved by the government of former President Carlos Mesa—which forms the legal basis to negotiations. Morales’ 1 May “nationalisation” decree essentially does no more than extend the deadlines stipulated in this law. The law has many limits and loopholes in terms of application.

Thus the Bolivian authorities and civil servants are tied down by the regulations in the submissive law left behind by ex-President Gonzalo Sánchez de Lozada, who was brought down by popular insurrection in October 2003.

“We are still working with the Sánchez de Lozada law because the current version (3058) does not have its regulations updated (…) This notably harms the process of recovering the hydrocarbons”, maintains the now-former Hydrocarbon Superintendent, Santiago Berríos.

(translated by Luke Stobart)