Bolivia and business investment: Evo’s administration turns one

Oliver here from Bolivia.

Evo Morales completed his first year in power this week. By the standards of Bolivia’s febrile politics, he has done well to hold on to his seat for so long. To mark the occasion, Parliamentary delegates – and the few TV viewers with enough stamina – were treated to a five hour speech by the former coca grower.

Several issues have grabbed the headlines during Evo’s first twelve months: a proposed land reform, an impending new constitution and a revised hydrocarbon law. International attention has focused mostly on Morales’ external policies. Bolivia’s close kinship with other “socialist” governments is seen as evidence as a general “swing to the left” in the region. News that Evo has opened the door to Cuban doctors and Venezuelan military has certainly raised eyebrows among some international observers. Now there is talk of strategic economic alliances with Iran, India, China and basically anywhere that is not the US. Given that the Washington-based InterAmerican Development Bank last week agreed to write off US$1.044 billion of Bolivia’s $US1.6 billion debt, such moves appear a little churlish.

Evo’s popularity remains high in Bolivia, however, although opposition to his policies are growing. The resource-rich eastern states – known here as the “medialuna” (Santa Cruz, Beni, Pando and Tarija) – are all pushing for greater autonomy from the federal government. Now other states want in on the act. Recent riots between pro- and anti-autonomy groups in Cochabamba, Evo’s home state, resulted in two deaths and a large number of injuries.

Further evidence that Evo’s “Bolivarian revolution” could be creaking at the seams came last week when he announced a major cabinet reshuffle: seven of his 16 ministers got the chop. Later in the week, Juan Carlos Ortiz, the head of Bolivia’s state run energy company YPFB, announced his resignation. Only in the job since last August, he claimed that excessive political interference had prevented him from turning around the ailing state company. With only 515 full-time employees (most of whom are in administration), YPFB falls far short of regional powerhouses, such as Mexico’s Pemex, Venezuela’s PDVSA and Brazil’s Petrobras. Yet YPFB’s diminutive size has not stopped Morales’ administration from flexing its muscles with foreign-owned companies. Petrobras Bolivia, Repsol YPF, and Andina have all been told that any future gas export deals must include a commitment to meet internal domestic demand first. Bolivia’s gas reserves should persuade most foreign investors to stay put, but they can expect a good deal more politically-motivated meddling as long as Evo is in the hot seat.

Oliver Balch, Latin America editor

Comments are Closed

All rights reserved @ SustainableSmartBusiness