Tuesday, May 02, 2006

"For wide is the gate, and broad is the way, that leadeth to destruction"

(The title comes from Matthew 7:13.)

I've previously said that Bolivia's president, Evo Morales, is walking in Chavez's footsteps. He has now proved the kind of man he is: a tyrant.
Bolivia's military takes over gas fields

LA PAZ, Bolivia (Reuters) - Bolivian President Evo Morales ordered the military to occupy the country's natural gas fields Monday after nationalizing the hydrocarbons sector and threatening to expel foreign companies if they do not sign new contracts within six months.

Impoverished Bolivia has the second largest natural gas reserves in South America after Venezuela, and the question of how the country should manage these riches has been at the heart of several popular revolts since 2003.

Morales became president in January on vows to exert more state control over the country's natural resources, reflecting a growing backlash against free markets and foreign investment in Latin America. Radical leftists recently complained that he had made little progress on this front....

At a Labor Day celebration crowding La Paz's main plaza, Garcia said the government's energy-related revenue will jump to $780 million next year, expanding nearly sixfold from 2002.

Morales had promised to nationalize the gas sector even during his campaign but repeatedly said he would not expropriate foreign companies' assets....

Bolivia's actions echo what Venezuelan President Hugo Chavez, a Morales ally, did in the world's fifth-largest oil exporter with forced contract migrations and retroactive tax hikes -- conditions that oil majors largely agreed to accept.

Morales read aloud the government decree, which stated that "the state recovers ownership, possession and total and absolute control" of hydrocarbons.

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

YPFB will pay foreign companies for their services, offering about 50 percent of the value of production, although the decree indicated that companies at the country's two largest gas fields would get just 18 percent.

In the new operating contracts, Bolivia will have to give some incentives to foreign companies to keep investing. YPFB alone has no way of financing the development of gas fields.
That's some incentive. Foreign companies can still invest in Bolivian natural gas operations, and they get to stare down the barrel of a gun as Morales decrees the new contracts. And there's now a very real danger that once foreigners have expanded operations beyond a certain point, Morales will use his military to seize everything "for the people." Instead of boosting Bolivia's natural gas revenues in coming years, Morales will more likely discourage foreign investment, no matter how how much Bolivia has in natural gas reserves.

Bolivia is said to be South America's poorest country, yet curiously enough, it still has enough of a military to seize land. Beware of leaders who, no matter how democratically elected, maintain powerful (relative to the people) standing armies. And how is Bolivia threatened, anyway, that it must spend 1.4% of GDP on its military? Bolivia's only real dispute is over the Atacama corridor, but Bolivia would be the one to start a war, not Chile. Maybe those Brazilian soccer stars are pretty menacing. Or shall we go with the most reasonable explanation, that Morales is no different than every corrupt leader preceding him, that the military's main purpose isn't for national defense, but to keep the people in line?

This weekend, Morales, Hugo Chavez and Fidel Castro signed their own trade pact for their countries. Well, for all their rhetoric against capitalism and rich, imperialist countries, their countries will hurt far more than any of their trading partners. as I've said before, the poor do not prosper by trading only amongst themselves; they prosper by selling goods and services to the wealthy. Morales and Chavez are ensuring that wealthy Bolivians and Venezuelans will do what they can to get themselves and their wealth out, ensuring that the poor will have no way up at all. Eventually they'll declare full socialism to keep the wealth in, until it all dwindles away and they become the new Castros.

If you want to look at Bolivia's and Venezuela's future, look no further than Cuba. Look at the miracle of socialism, which created such a prosperous economy that Cuba desperately needed Soviet handouts -- a society so committed to equality that everyone, other than the leaders, still is equally poor. Look at the miracle of 100% literacy, but only so the people can read what the government permits them. Look at the miracle of Cuba's universal health care (caution: disturbing images), which keeps people alive only as long as they obey the government. How many will tread this path to destruction, having willingly supported the leaders that led them?


Anonymous Anonymous said...


Tuesday, May 02, 2006 3:33:00 PM  
Blogger TKC said...

I thought this was interesting: "Garcia said the government's energy-related revenue will jump to $780 million next year, expanding nearly sixfold from 2002." Not if you throw the buyers out because then it becomes worthless.

Tuesday, May 02, 2006 6:01:00 PM  
Blogger Perry Eidelbus said...

Hello, LB, or should I say...DL? Then again, I've been wondering if you're actually CJ. "Tatas" is more CJ's style. But you're not posting from the usual IP range.

Yes, TKC, that's why I noted Morales' plan to boost revenue will likely backfire. There might be every welcome in the world, but what sane person will risk investing in a country where the president can send in the military to seize the property?

Tuesday, May 02, 2006 10:33:00 PM  

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