Monday, May 01, 2006

BREAKING NEWS: Evo Nationalizes Energetic Resources (Update 1)

Evo Morales has just nationalized the natural gas and oil industry an hour ago with a decree. Earlier today, he spoke at the San Alberto gas and oil field (owned by Petrobras) and ordered foreign companies to send their supplies to YPFB for sales and industrialization. He also said that if companies were not willing to follow his decree, they would have to leave Bolivia within 6 months. Morales referred to the day as being "historic" and also warned that he would take over all companies that were privatized in the 1990s. With a touch of populist spectacle, he had a soldier install a Bolivian flag on top of the oil field for all to see.

AP News reports no reactions from the foreign companies, opposition, or other governments.

Read the AP News' piece here.

The BBC's story is here.

The UK's Financial Times (here) also reports that Evo has sent the military to occupy 53 oil and gas fields and installations.

According to Reuters and ABC, foreign companies would be left with only 18% of their production.

According to this piece, Spanish government has issued a statement saying that they hope that Morales negotiates the new contracts and keeps in mind the interests of other parties. They also hope that Morales does not send a negative message to investors worldwide. Too late.

Xinhua reports that the price of crude has felt the effect of Evo's shenanigans in Bolivia.

EFE News reports that petrol stations (owned by Bolivian investors) were among the oil and gas installations seized. Some unnamed diplomats said that the decree was much harsher than expected and that they expect foreign oil companies to initiate arbitration or leave the country.


Read the whole nationalization decree at Barrio Flores (in Spanish).

Boz's opinion on how Evo will reacto to international pressure can be found here.

Ciao! has two posts on the subject: here (he argues that Evo took the worst possible way and that in 3 months we will start knowing the success of the decree) and here (he argues that YPFB will become a political instrument).

Publius Pundit also comments on the news.

MABB has an international news roundup.

Update 1: A comment left by Candiaman reports the reactions directly from Bolivia:
"the gas stations were literally invaded by cars in just a few secs after the speech ended, by now some of the have been depleted..." and
"Just spoke with friends in Santa Cruz eho are working al petrobras and hace confirmed a rumor, they can´t get in the buildings the military forces won´t allow people to get in."

Thanks for the comment, Candiaman! You can see the full comment below.

Two photos from AP News Agency.

Look at the Cuban and Venezuelan Flags celebrating. A sign of things to come.

The banner reads "Nationalized. Property of Bolivians". Shameless populism in action.

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Blogger mcentellas said...

How can he think this is in Bolivia's (or even his own!) long term best interest? Has he never read Bolivian history books? Cripes.

11:33 PM  
Blogger Alvaro Ruiz-Navajas said...

Hi Miguel. Yeah. I think he has never even read a newspaper. As for Bolivia, I don't think he has its best interest in mind. He just wants to consolidate power as soon as possible.

Bolivia's darkest hour began three months ago and no one noticed.

12:13 AM  
Blogger CandiaMan® said...

I agree, I canot get out of the shocking news, this was suposed to be a normal 1th of May, the newspaper anounced the abolition of 21060 and that was it...

Suddenly, as we were in the meadle of launch, the shocking news changed it all, the gas stations were literally invaded by cars in just a few secs after the speech ended, by now some of the have been depleted...

What they were thinking? that energy minister Soliz Rada is a well Known radical, but things got out of hand this time.

Just spoke with friends in Santa Cruz eho are working al petrobras and hace confirmed a rumor, they can´t get in the buildings the military forces won´t allow people to get in.

Darkest hour has finally came on...

i´ll send links soon as fresh news arrive

5:11 AM  
Blogger Inka-Wolfy said...

in my mind there are two things to consider:
1. Chavez just extended his "oily and gassy" influence by economically "annexing" Bolivia, the country with the second highest natural gas resources in Latin America.
2. Bolivia, already the poorest country in South America, will soon take a nose-dive into oblivion.

Viva Latinamerica socialista, the emerging new 'USSR' in the southern hemisphere. Its fate will ultimately be the same, hopefully a lot sooner.

5:17 AM  
Blogger Inka-Wolfy said...

gracias candiaman,
always good to get an authentic report right from the source.

5:22 AM  
Blogger Alvaro Ruiz-Navajas said...

Candiaman, thanks for your comment, it was very helpful and informative to get the reactions from Bolivia.

I have posted some highlights in the main post. Thanks again.

Yes, Inka-Wolfy, both points are right on the mark. In the end this will only play into Chavez's game. This is the equivalent of Hitler's Anschluss. Bolivia is now part of the Bolivarian empire.

And yes, Bolivia will soon start to nosedive. Most Bolivians that voted for Evo did so under the assumption that whatever happened, we could only improve the situation ("es kann nur besser gehen"). Well, we ain't seen nothing yet. Let's just hope that it doesn't take as long as for the USSR.

9:45 AM  
Blogger mqsc said...

I think that Evo has read very well Bolivian history books! And this is why he has decided to do this.
In all this years the maiority of Bolivian people has lived in poverty while under their feet they have a great richness!!

11:44 AM  
Blogger Alvaro Ruiz-Navajas said...

So you think Evo knows about how the previous two waves of nationalization ended in chaos and economic disaster?

12:06 PM  
Blogger mqsc said...

I do not know an economic disaster bigger than the capitalistic neoliberalism in the south of the world....and I think Evo knows this like the poorest in Boliva.

1:49 PM  
Blogger Frank IBC said...

Msqc -

States that rely on income from natural resources, rather than the efforts of their own people, are doomed to mediocrity.

Miguel C. explains this far more articulately than I can:

Why? Because the state can use nationalized industries as virtual slush funds to distribute resources to loyal followers (read: corruption, clientelism) w/o really developing the country's economic or civil society. It works fine for a while. But as soon as the resource runs out (or its price declines in the international market), things just completely fall apart. The state no longer has a cash cow to reward loyalists & retain public spending, but it has deliberately destroyed private economic society & civil society (including independent political parties or civic associations).

Counter-examples are Switzerland, Hong Kong (prior to takeover by China), and Singapore, which have zero natural resources but are among the most successful nations on Earth.

5:38 PM  
Blogger Alvaro Ruiz-Navajas said...

Ok, MQSC, if all your argument can be reduced to "capitalism is bad, mmkay", please suit yourself.

11:20 PM  

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