ENERGY-BOLIVIA: Voters Set to Decide on the Future of Gas Reserves

By Franz Chávez Reprint | | Print |

Franz Chávez

LA PAZ, Jul 16 2004 (IPS) - Bolivian voters will go to the polls Sunday to decide how this impoverished country’s huge natural gas reserves should be exploited.

Bolivia, the poorest country in South America, has the second-largest natural gas reserves in the region after Venezuela.

But the question of what to do with the gas has been a flashpoint of conflict, triggering month-long demonstrations that ended up toppling President Gonzalo Sánchez de Lozada in October 2003. He was replaced by his vice-president, Carlos Mesa, on Oct. 17.

Among other promises, Mesa pledged to hold a referendum to allow the 4.4 million registered voters in this country of nine million to help re-design the country’s hydrocarbons policy.

The referendum, which has supporters within both the government and the opposition as well as social and human rights organisations, has also faced threats of boycotts and calls that its results be annulled.

Voters will be asked to vote "Yes" or "No" on five questions. The first will be whether the 1996 hydrocarbons law passed during Sánchez de Lozada’s first term should remain in place.

That legislation opened the gas industry to private capital and drew three billion dollars in foreign investment while awakening a strong current in favour of re-nationalisation.

If the "Yes" vote wins on each of the five questions, the state would regain control over the gas sector, and the badly weakened state oil company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) would be strengthened.

In addition, the government would be allowed to use the country’s gas resources as a bargaining chip in any future negotiations with Chile on an outlet to the sea.

Bolivia lost its coastline to Chile in the War of the Pacific (1879-1884), and since then has demanded sovereign access to the ocean.

President Mesa will find out Sunday night if most Bolivians agree, for example, that gas could be exported after domestic residential and industrial demand has been met, and that the royalties charged to the foreign oil companies exploiting the country’s gas should be raised from 18 to 50 percent of earnings.

Mesa is pushing for a "Yes" vote on all five questions in order to maintain coherence in the bill he plans to send to Congress to replace the current law on hydrocarbons as soon as the referendum results are in.

The results from each question will be separately tallied, and according to the election authorities, the outcome will be announced on Sunday night.

Although the referendum is binding, political analysts say each of the questions could have different interpretations in Congress, which will have the task of translating the outcome into new legislation on the administration of Bolivia’s gas.

Just a few days before the vote, the social climate began to heat up again with the declaration of a 72-hour strike in the city of El Alto, next door to La Paz, an area that was at the heart of last October’s civil unrest.

The uprising, known here as the "gas war", was driven by organisations of campesinos (peasant farmers), the unemployed and street vendors.

Around 70 were killed as a result of the harsh police and military crackdown. The protests toppled the president and squashed plans to export Bolivia’s gas to the United States and Mexico through a pipeline that would run to a Chilean port.

Although the demonstrators demanded that a referendum be held to allow voters to determine the country’s natural gas policy, activists in El Alto are now calling for a boycott of Sunday’s vote, on the argument that the questions do not faithfully reflect their call for the re-nationalisation of the gas and oil industry, in order to cancel 78 concessions to private oil companies.

El Alto is an enormous slum area with the worst deficit in public services and utilities in Bolivia despite its proximity to La Paz. Some 71 percent of the inhabitants live in poverty, compared to a national official poverty rate of 51 percent.

By contrast, the poverty rate in the central province of Santa Cruz stands at just nine percent, according to the National Institute of Statistics.

Meanwhile, in rural areas the most radical leaders have announced they will destroy and burn ballot boxes and take other actions to impede voting, which will be duly punished, former vice-president Luis Ossio told IPS.

Annual per capita income in Bolivia is estimated at 870 dollars, while a study by the local Labour and Agrarian Development Research Centre (CEDLA) states the number of unemployed nationally will reach 360,000 by the end of the year.

"The oil companies bring us poverty and destitution. They live in their compounds like kings while we live like beggars," said one of 60 demonstrators who reached La Paz Tuesday after a 1,500-km protest march on foot from the southern Chaco region, where the Brazilian company Petrobras works the San Alberto field, which contains 11.94 trillion cubic feet of gas.

Bolivia has 54 trillion cubic feet of proven and probable gas reserves, which are currently controlled by 12 transnational oil firms.

Wearing their traditional wide-brimmed leather hats, the demonstrators spoke out after climbing from the plains to La Paz, the seat of government, located 3,800 metres above sea level.

They demanded the revocation of the contract with Petrobras, accusing the company of expropriating 500 hectares of farmland without paying them any compensation, and of polluting local rivers.

"The referendum will grant numerical legitimacy to a president who has no support bloc of his own in parliament and is backed by scattered social movements," political analyst Alvaro García Línera remarked to IPS.

Carlos Villegas, a CEDLA expert, said the referendum will not bring about substantial changes in the energy sector. He said the 78 contracts between private oil companies and the Bolivian state will remain unchanged, and that the outcome of Sunday’s vote will not be retroactive, but will only be applicable to future concessions.

The official coordinator of the referendum, Ricardo Paz Ballivián, said there will be no nationalisation through the confiscation of oil company assets, but promised a review of the contracts that granted the companies control over the natural gas reserves.

The government has launched a campaign to encourage participation in the referendum, while the political parties have taken varying stances.

The Movement Towards Socialism (MAS) backs the referendum and is opposed to the boycott proposed by other campesino groups, MAS lawmaker Dionicio Núñez, the second vice-president of the Chamber of Deputies, told IPS.

MAS, which is headed by the leader of the coca-growers, legislator Evo Morales, has instructed supporters to vote "Yes" to the repeal of the current law on hydrocarbons, the recuperation of state control over the natural gas reserves, and the strengthening of the YPFB state oil company.

As for the questions on using natural gas as a bargaining chip in eventual negotiations on an outlet to the Pacific Ocean and whether gas should be exported, MAS urges people to vote "No", because it sees both elements as merely targeted at backing Mesa’s energy policy and strengthening the presence of foreign companies in Bolivia’s export sector.

Abstention and the destruction of ballot boxes are promoted by the Indigenous Pachakuti Movement, led by Felipe Quispe, while the opposition Movement of the Revolutionary Left (MIR) has called for a "Yes" vote in all five boxes.

A heated political debate will get underway the day after the referendum when the various groups begin to interpret the results in order to draw up the new legislation, said García Línera.

MIR and the Nationalist Revolutionary Movement (to which Sánchez de Lozada belonged) are expected to move closer to Mesa on energy policy, to counterbalance a shift further to the left by MAS, which will fight for the re-nationalisation of the country’s gas resources.