Tuesday, May 02, 2006

Bolivia Predator

"President Evo Morales ordered the military to occupy Bolivia's natural gas fields on Monday after nationalizing the industry and threatening to expel foreign companies that do not recognize state control."

[ . . . . ]

Morales became president in January on vows to exert more state control over natural resources, reflecting a growing backlash against free markets and foreign investment in Latin America.

The president chose Labor Day, May 1, to announce the nationalization, which stipulates companies will have to leave Bolivia unless they sign contracts within six months recognizing state control.

"This is just the start ... tomorrow or the day after it will be mining, then the forestry sector, and eventually all the natural resources for which our ancestors fought," Morales told a jubilant crowd in La Paz's main plaza.

[ . . . . ]

The government decree says "the state recovers ownership, possession and total and absolute control" of hydrocarbons.

This means the state will own and sell these resources, relegating foreign companies to operators. Previously, Bolivian law said the state no longer owned the gas once companies extracted it from underground.

[ . . . . ]

South America's poorest nation, Bolivia has reserves of some 48.7 trillion cubic feet and exports most of its gas to Brazil and Argentina. Foreign companies have invested more than $3 billion in the last decade, much of it in exploration."
I haven't studied Bolivia's sytem of political economy, but I have to guess that a significant reason Bolivia is "South America's poorest nation" is likely to be a government that embraces economic predation.

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