Who will control Bolivia's natural gas?

After the referendum...

Unemployed Bolivian miners threaten to light sticks of dynamite in front of the COMIBOL (Corporacion Minera de Bolivia) office in the center of La Paz, August 5, 2004.
Photo: David Mercado

During the last three decades, the most pronounced feature across Latin America has been the misery created by neoliberal policies imposed by the United States through its financial institutions, the International Monetary Fund and the World Bank. Free market economic policies have opened the doors to foreign investment and new tax revenue, but at the expense of the poor and working people of the region.

Against this backdrop, opposition to these neoliberal policies has taken a wide variety of forms. In a number of cases, government-sanctioned referendums have served as focal points for efforts to roll back IMF-backed initiatives. For example, in 2002, the people of Tambogrande, Peru overwhelmingly voted against allowing mining in the city by the Canadian-based Manhattan Mining Corporation.

This year, on July 18, a referendum took place in Bolivia addressing one of the most precious natural resources in Bolivia—natural gas. After Venezuela, Bolivia has the largest oil reserve in South America. Oil and water have been matters of burning concern for Bolivians.

Seventy percent of Bolivia's 8.2 million people live below the poverty level. Most Bolivians do not see any benefits from their natural resources: while the great majority of people survive on $2 a day, the country's natural gas wealth is worth anywhere from $70 billion to $210 billion, according to a July 18 French Press Agency report.

The people of Bolivia have a long history of struggle in defense of their natural resources. In February 2000, the city of Cochabamba witnessed a popular uprising when the U.S. company Bechtel mandated increased water rates. The mass protests forced the company to leave the country.

In October last year, poor and indigenous people in Bolivia furiously protested plans by then-President Gonzalo Sanchez de Lozada to export gas through a port in Chile. In the struggle against the plan, more than 80 people died. Sanchez de Lozada ultimately resigned.

Under a 1996 law passed by Sanchez de Lozada's government, Bolivia opened its gas sector to foreign investors. When Carlos Mesa assumed the presidency after Sanchez de Lozada, he was under enormous mass pressure to nationalize the natural gas reserves.


The July 18 referendum was a political maneuver on the part of President Mesa. Mesa has been a supporter of the free market economy policies. But after assuming office, he promised he would work towards making Bolivia a "republic of equals." He proposed a referendum to address the demand for nationalization.

The five questions posed for voting in the referendum were the following:

o Do you agree that Hydrocarbons Law No. 1689, signed by former President Gonzalo Sanchez de Lozada should be repealed?

o Do you agree that the Bolivian state should recover ownership of all wellhead gas?

o Do you agree that YPFB [the state oil company] should be re-created, recovering Bolivia's share in privatized petroleum companies in a manner that allows it to participate in the entire hydrocarbons production chain?

o Do you agree with President Carlos Mesa's policy to use gas as a strategic resource to achieve a useful and sovereign access to the Pacific Ocean?

o Do you agree that Bolivia should export gas within a national policy framework that provides gas to Bolivians; promotes the industrialization of gas within national territory; levies taxes and/or royalties on energy companies up to 50 percent of the production value of gas and oil; and designates the revenues from the export and industrialization of gas primarily for education, health care, roads and jobs?

Missing from these questions was the most popular and direct demand: nationalization. That option would have been supported by 80 percent of Bolivians, according to independent polls. It is a major demand by labor unions, coca growers (a traditional agricultural sector for centuries) and indigenous peoples since Mesa became president.

However, due to the complicated wording of the questions, many Bolivians did not understand the referendum, according to numerous analysts. A large number of people, encouraged by government propaganda, believed that they were voting for nationalization.


Adding to the confusion were conflicting messages sent by various leaders of the popular movement. Sectors of the Bolivian Workers Federation (COB), along with indigenous leader Felipe Quispe, called on the people to boycott the referendum.

Evo Morales, leader of the Movement Toward Socialism (MAS), did not support the boycott. He has a large base of support among coca growers and was an active player in the struggle to topple the former government in October. He did not join the abstention call, instead encouraging his followers to vote.

In the end, all five measures gained more than 60 percent approval. But some 48 percent of eligible voters did not vote—a remarkably high abstention rate considering that voting in Bolivia is mandatory, and failing to report to vote could result in high fines and jail time.

The results showed wide support for opposition leaders' call to abstain. Unlike elections in other parts of the world, like the United States, the low percentage of voters was not the result of apathy, but instead a well thought-through decision to boycott the referendum.


There were conflicting interpretations of the results. Evo Morales interpreted the results of the referendum as "the nationalization and the revision of contracts" with the multinational oil corporations. President Mesa presented the opposite view: "The concept of property rights doesn't mean nationalization. We don't believe in closing the door to investors."

Besides Mesa's own words, the U.S. State Department initially commended Bolivia's referendum. "The state has recovered its property," said State Department spokesperson Richard Boucher. And Roger Noriega, Assistant Secretary for the Western Hemisphere Affairs, said that "the referendum is very positive and constructive, and it is a sign that Bolivia is looking toward the future." These statements represent the hopes in Washington that the referendum can preserve the interests of the big multinational corporations.

The United States government has never congratulated any country that has nationalized industries or expropriated natural resources for their own use—especially when the interests of U.S. corporations have been threatened. The United States public support for the referendum is based on the outcome it is hoping for: that private energy companies will be able to export large quantities of natural gas, while allowing Mesa's government to increase the royalties it receives. That is the real reason why Washington is cheering.

With widely different interpretations of the results of the referendum, the struggle will continue in Parliament. On July 31, President Mesa presented a formal project including 30 articles to be analyzed and evaluated by the Parliament. These articles, supposedly interpreting the results of the referendum, were reportedly written by international experts and World Bank officials.

Mesa has no party to support him in Congress, nor allies in Bolivia's military. He is likely to face great opposition from unions and peasant organizations that have already succeeded in driving one president from power. The MAS also announced that it would present a new proposal to congress based on the party's own interpretation of the results.

Immediately after the referendum, on July 20, COB leaders told the Xinhua news service that "the war continues." Luis Choquetilla, a union leader in El Alto, said that the government must "move on with the nationalization of those resources that were confiscated from us in the past."

Almost a month after the referendum took place, popular organizations have made a call to resist the new hydrocarbon law, fighting the approval of the referendum by Congress and demanding the nationalization of Bolivian gas.

Worries about this continued pressure have clouded some of Wall Street's initial optimism. "Businessmen now fear that compromises with left-wing parties such as MAS, which want outright nationalization of the energy sector, could lead to confiscation policies," UPI reported on Aug. 10.

In the last few years in Bolivia, mass mobilizations have resulted in one big multinational corporation packing their bags and one president resigning. These are not small gains. The Bolivian people are continuing the struggle to recover what has been stolen from them over hundreds of years and which rightfully belongs to them.

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