Bolivia is dead-set on nationalizing its gas-and-oil industry, and has deployed soldiers to take over the facilities of gas entities mostly owned by foreign companies. This was widely expected, as Evo Morales, the leftist Bolivian President and former coca farm leader, has assumed the leadership mainly on a socialist platform. With surging prices in oil and gas, Bolivia is set to benefit from this scenario at the onset, having the largest gas reserves in South America, after Venezuela.
Not surprisingly, Venezuela’s President, Hugo Chavez, has given his thumbs up sign to Morales, the former seems to act as the latter’s mentor. Ostensibly, both leaders share an affinity: both are members of indigenous communities who took the helm of political leadership under a socialist-populist agenda.
The implications of nationalizing this crucial industry will have serious repercussions. Although on paper, this would mean taking back just its fair share of profits from resources that they rightly own, reneging on existing contracts with oil and gas multinationals might prove to be only counter-productive in the long-run.
Simply taking over ownership does not guarantee it can successfully take over the operations as well. Is La Paz well equipped to undertake massive investments to fund exploration and development of its gas reserves? Does it have the necessary infrastructure support, and most critically, manpower support? Bolivia is among the poorest countries in South America.
Governments engage in business activities only in sectors where the private sector is unable to carry it out, like national defense and social services. Or in some cases, critical sectors like power generation and telecommunications that require really massive investments.
In most Western countries, these sectors are largely-privately held, given that developing technology and funding investments best take shape in a capitalist set up where operations are not hampered by regulatory gridlocks and unprofitable concessions to powerful interest groups.
In Bolivia’s case, American, Spanish and Brazilian companies mainly run the gas facilities and conduct the exploration and drilling, mainly because these companies have the technology, and most importantly, the cash to fund these things.
By kicking them out, it remains unclear whether the La Paz can sustain the same momentum in running these facilities given its lack of resources. I’m quite sure Morales has already considered this. The thing is, he may find himself relying increasingly northwards, to Caracas for support. Morales is like Chavez’s boy toy now.
And so there appears for Bush, a growing ‘axis of evil’ version in Latin America sans the nuclear ambitions (but remains a threat, nevertheless) personified by the trio led by Cuba’s Fidel Castro with Venezuela’s Chavez and the latest addition, Bolivia’s Morales.
Morales is clearly getting his cue and support from Chavez (Castro is too old and ailing, and besides Cuba is not oil-rich like Venezuela). Venezuela is riding sky high on current high prices of oil. And recent researches show that Venezuela has very large untapped quantities of oil and gas reserves. Because of this, Chavez is able to snub the United States and make US oil executives prostate before him, much to Bush’s chagrin. His extreme right-wing ally, Pat Robertson of the 700 Club fame, has even suggested that the US assassinate Chavez instead (this guy’s a Hitler in a minister’s robe).
Bolivia is set to follow his example. Next-door neighbor Brazil remains hungry for gas to fuel its growing economy, and so is Argentina, Bolivia’s two main clients. The rest goes northwards.
But whether or not Bolivia can buck the odds and ride high on existing high global demand for energy remains a big question. The fall out from nationalizing these critical industries will be felt, unfortunately in other sectors just as critical.
For one, foreign loans and grants necessary for education, healthcare, and transport infrastructure, for example, will not likely make a stopover in La Paz, as this means Bolivia cannot be counted on to honor its obligations.
Another is that other critical industries (mining and agriculture) are likely to be nationalized, as Morales has indicated in so many occasions. You can bet investments in these areas to freeze as well.
And so the vicious cycle of poverty hounding its mostly Indian and mestizo people will likely persist. That is always the danger in installing a die-hard Marxist to head a government. The heart is in the right place, although the brain gets stuck in its bankrupt ideology, while humming the Internationale.
The socialist platform is a throwback to the Cold War era where centrally-planned economies did show a certain degree of economic success. But none has really made it to the present, except of course, Cuba and North Korea. But look where they are now.
You ask, so what has Bolivia’s political issues got to do with us on the other side of the planet?
Nothing.
Why are you even reading this?
Not surprisingly, Venezuela’s President, Hugo Chavez, has given his thumbs up sign to Morales, the former seems to act as the latter’s mentor. Ostensibly, both leaders share an affinity: both are members of indigenous communities who took the helm of political leadership under a socialist-populist agenda.
The implications of nationalizing this crucial industry will have serious repercussions. Although on paper, this would mean taking back just its fair share of profits from resources that they rightly own, reneging on existing contracts with oil and gas multinationals might prove to be only counter-productive in the long-run.
Simply taking over ownership does not guarantee it can successfully take over the operations as well. Is La Paz well equipped to undertake massive investments to fund exploration and development of its gas reserves? Does it have the necessary infrastructure support, and most critically, manpower support? Bolivia is among the poorest countries in South America.
Governments engage in business activities only in sectors where the private sector is unable to carry it out, like national defense and social services. Or in some cases, critical sectors like power generation and telecommunications that require really massive investments.
In most Western countries, these sectors are largely-privately held, given that developing technology and funding investments best take shape in a capitalist set up where operations are not hampered by regulatory gridlocks and unprofitable concessions to powerful interest groups.
In Bolivia’s case, American, Spanish and Brazilian companies mainly run the gas facilities and conduct the exploration and drilling, mainly because these companies have the technology, and most importantly, the cash to fund these things.
By kicking them out, it remains unclear whether the La Paz can sustain the same momentum in running these facilities given its lack of resources. I’m quite sure Morales has already considered this. The thing is, he may find himself relying increasingly northwards, to Caracas for support. Morales is like Chavez’s boy toy now.
And so there appears for Bush, a growing ‘axis of evil’ version in Latin America sans the nuclear ambitions (but remains a threat, nevertheless) personified by the trio led by Cuba’s Fidel Castro with Venezuela’s Chavez and the latest addition, Bolivia’s Morales.
Morales is clearly getting his cue and support from Chavez (Castro is too old and ailing, and besides Cuba is not oil-rich like Venezuela). Venezuela is riding sky high on current high prices of oil. And recent researches show that Venezuela has very large untapped quantities of oil and gas reserves. Because of this, Chavez is able to snub the United States and make US oil executives prostate before him, much to Bush’s chagrin. His extreme right-wing ally, Pat Robertson of the 700 Club fame, has even suggested that the US assassinate Chavez instead (this guy’s a Hitler in a minister’s robe).
Bolivia is set to follow his example. Next-door neighbor Brazil remains hungry for gas to fuel its growing economy, and so is Argentina, Bolivia’s two main clients. The rest goes northwards.
But whether or not Bolivia can buck the odds and ride high on existing high global demand for energy remains a big question. The fall out from nationalizing these critical industries will be felt, unfortunately in other sectors just as critical.
For one, foreign loans and grants necessary for education, healthcare, and transport infrastructure, for example, will not likely make a stopover in La Paz, as this means Bolivia cannot be counted on to honor its obligations.
Another is that other critical industries (mining and agriculture) are likely to be nationalized, as Morales has indicated in so many occasions. You can bet investments in these areas to freeze as well.
And so the vicious cycle of poverty hounding its mostly Indian and mestizo people will likely persist. That is always the danger in installing a die-hard Marxist to head a government. The heart is in the right place, although the brain gets stuck in its bankrupt ideology, while humming the Internationale.
The socialist platform is a throwback to the Cold War era where centrally-planned economies did show a certain degree of economic success. But none has really made it to the present, except of course, Cuba and North Korea. But look where they are now.
You ask, so what has Bolivia’s political issues got to do with us on the other side of the planet?
Nothing.
Why are you even reading this?
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