By Ricardo Israel Zipper (for Safe Democracy)

Ricardo Israel Z. analyzes the reasons why Evo Morales decided to nationalize the hydrocarbon, and says that there exist serious doubts over the fact that the initiative may enrich Bolivia. Nevertheless, Israel Z. believes that the measure was not a surprise, and that it will be the political and economic success of Morales in the short-term. The most probable fact is that the multinational companies decide that it is no worth betting for the failure of the initiative, but they will decide that the most important thing is to be present wherever the gas and the petroleum are.

Ricardo Israel Z. is a lawyer and a political scientist. He holds a PhD and a masters degree in Political Science from the University of Essex and is a Professor of Political Science at the University of Chile. He leads the International Center for the Quality of Democracy as well as the School of Law and Social Sciences at the Autonomous University of Chile. He is the President of the Army Forces and Society Committee at the World Political Science Association. He has published dozens of books and essays, which have been translated into many different languages, and is a director and commentator on international Radio and TV shows about politics.

THE DECISION TO NATIONATIONALIZE THE BOLIVIAN HYDROCARBON caused more surprise for the way it was taken than for the decision itself, since Evo Morales had announced it several times during the presidential campaign. However, after his assumption he had taken a negotiating position.


That is why the attention was caught by the way of proceeding: including the military occupation. The truth is that in high-price periods, the governments draw on measures which reinforce their roles. It was done by Jimmy Carter in US in the seventies, through extraordinary taxes. Ecuador, Venezuela, Russia and several other countries have done it recently. In fact, in other high-price periods, nationalizing advances have taken place, from Venezuela to Saudi Arabia.

But, which is the difference of what is happening now? That in the other experiences negotiating efforts was done. Therefore, why did Evo Morales opt for the unilateralism?

There are two reasons: the first one is economic, and consist in the fact that the Bolivian government bets that in a high-price period and of increasing demand, the transnational companies will opt for reducing their benefits in exchange for the possibility to stay in the country; which although is a small actor in the world market –the decision practically did not change the world prices–, it owns the second largest reserves of South America.

The second reason is related to the political bet: Bolivia must face its Constituent Assembly, and considering the popularity that this kind of claims grants, and having a much higher income for the Bolivian treasury, Morales may have resources which will help him to obtain an institutional reform for him to stay in power.

Besides, the decision took place in a context when the popularity of the President, although still high, was beginning to descend, and where an escalation in protest was announced. Furthermore, in such scenario, the president Morales must neutralize the autonomist tendencies of Santa Cruz and other regions of the country.

There is clearly a possibility that the bet fails. Not only the European countries have felt affected (specially Spain), but Brazil, principal investor and with a Bolivian gas-dependency of more than a 60 per cent.

Lula must be very upset, considering that Morales opted for the Chávez style in the competition for influence and that being Petrobras a public company, he is the direct responsible as President.

On the other hand, there is no doubt about the fact that US has considered as a provocation the announcement of the nationalization immediately after the meeting of Castro, Morales, Chávez and Daniel Ortega at La Habana.
Otherwise, if transnational companies do not accept the conditions and decide to go to the International Courts, the situation may be extremely complicated for the Bolivian government, with confiscation over properties and deposits all over the world.

However, Evo Morales knows that he owns a grace period of 180 days, since it is very difficult that the transnational companies take a decision before the deadline to opt between accepting the imposed conditions or abandoning the country.

In fact, a great success was obtained after the meeting with Kirchner at Puerto Iguazú, where Lula and Chávez made sure that they will be part of the South American gas pipeline of Bolivia under the conditions they have been seeking since ever, and which were unfeasible without them, as they insisted on.

In this meeting, in exchange for ensuring the supply to its principal clients, as Brazil and Argentina, these last mentioned accepted to initiate negotiations related to the increase of the prices they paid for the gas.

By the way: the initiative seems to be taken out from the sixties. In the long term, Bolivia lacks of financial resources to invest. And without investment, it is possible that the production may not increase, but decrease.

Will the gamble be successful? We don’t know. It is doubtful that it will enrich the country, but in the short-term it will imply political success.

And the transnational companies may decide that it is not worth betting for the failure of the initiative, but to decide that what it matters most nowadays is to be present at the place where the gas and the petroleum are.