Who Owns Bolivia?

A few months ago, Evo Morales became Bolivia‘s first democratically elected indigenous head of state. Indigenous groups constitute 62% of Bolivia’s population, and those with mixed blood another 30%, but for 500 years Bolivians had been ruled by colonial powers and their descendants. Well into the twentieth century, indigenous groups were effectively deprived of a vote and a voice. Aymara and Quechua, their languages, were not even recognized for conducting public business. So Morales’ election was historic, and the excitement in Bolivia is palpable.

But Morales’ nationalization of Bolivia’s oil and gas fields sent shock waves through the international community. During his campaign, Morales made clear his intention to increase state control over national gas and oil. But he had made it equally clear that he did not intend to expropriate the property of energy firms – he wanted foreign investors to stay. (Nationalization does not, of course, necessarily mean expropriation without appropriate compensation.) Perhaps surprising for modern politicians, Morales took his words seriously. Genuinely concerned about raising the incomes of his desperately poor people, he recognized that Bolivia needs foreigners’ expertise to achieve growth, and that this entails paying fairly for their services. But are foreign owners getting more than a fair rate of return?

Morales’ actions are widely supported by Bolivians, who see the so-called privatizations (or “capitalizations”) under former President Gonzalo “Goni” Sanchez de Lozada as a rip-off: Bolivia received only 18% of the proceeds! Bolivians wonder why investments of some $3 billion should entitle foreign investors to 82% of the country’s vast gas reserves, now estimated to be worth $250 billion. While there has not yet been full disclosure of returns, or an audit of the true value of investments, it appears that investors would, at the old terms, have recouped all their money within just four years.

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