BOLIVIA: "Nationalization for the 21st Century"
Thomas Cromwell

The election of Evo Morales to the presidency a year ago brought about a sea change in Bolivia and sent ripples through Latin America. Morales is a long-time leader from Bolivia’s indigenous Indian community, and he was elected on a platform to better the lives of Bolivia’s poor classes.

For several months the new government in La Paz was without an ambassador to Washington, but a couple of months ago Gustavo Guzman was posted here. He recently sat down with DiplomaticTraffic.com to talk about the changes in his country, including a controversial re-writing of the constitution, the nationalization of energy resources and relations with neighbors and the United States.

Constitutional reform
The Constitutional Assembly has been in a situation of conflict, largely due to the changes going on in the country. There is a democratic majority and small minority in opposition. The issue of a 2/3 majority vote for proposed changes in the constitution is not in fact the main issue (as claimed by the opposition) because there has to be a 2/3 majority in the final vote to adopt a new constitution, and the new constitution will also then be subject to a referendum by the general population. So whether they vote 2/3 on each measure being debated is not important. There is a very small opposition group within the Constitutional Assembly that is trying to obstruct progress in any way it can.

The Constitutional Assembly is something the social movement has been asking for for years. The people opposing it now are those who were never in favor of a Constitutional Assembly. At any rate, we are quite certain that the Constitutional Assembly will be a force for coming together in Bolivia.

The main objective of the reform is the autonomy movement, that is autonomy for the regions. The first step has been to organize municipal democracy. Autonomy is inevitable, because it is a democratic process, but right now they are in the process of   figuring out what exactly autonomy will mean, with civic committees and the regions.

Nationalization of natural gas
The nationalization is not only part of President Evo Morales electoral program, it is something that all of Bolivia has been asking for, especially the social movements. It comes from the desire of the Bolivian people to recoup their natural resources. It is important to note that this is a modern nationalization. There have been no expropriations, no sort of takeover of private companies. The proof of this is that on October 28 all of the companies involved signed a contract with the Government of Bolivia that confirmed they would work together.

The nationalizations have really been an invitation to these businesses to have a new relationship with the Bolivian state and to continue having relationships with the Bolivian state.

One of the changes is that now there is a secure market for the long term, guaranteed for these businesses. This includes a contract with Argentina in which they are guaranteed to purchase Bolivian gas for 20 years. The extent of investment by a company in the past affects the status of its relationship with the state, with Bolivia receiving between 60 and 80 percent of the gross revenue, depending on the investment made by the business and the costs of operations. So the deal is that the Bolivian state receives more of the revenue but that the companies are secure and will stay in the country. This is why this is a nationalization for the 21st Century.

Jindal’s $2.3 billion investment
India’s Jindal is negotiating a $2.3 billion investment in iron ore mining and steel production. The agreement with the government for this will be different from the gas deal, however the project will require a huge amount of energy, which will come from the gas. The investment reflects the confidence of foreign investors in the Bolivia.

Two major mining projects
There are two major mining projects, the $680 million San Cristobal (silver/zinc/lead) mine owned by Canadian company Apex, and the $135 million San Bartolome silver mine owned by US company Coeur. These are long-standing projects, and the government has assured them that they will be protected. This year was the year of hydrocarbons in Bolivia, but next year will be the year of mining. In the 1980s a drop in mineral prices caused a crisis, now their rise is helping raise up the economy.

The role of Hugo Chavez
We speak of our friendship with [Venezuela’s] President Chavez in the same way that we speak of our friendship with [Argentina’s] President Kuchner and [Brazil’s] President Lula. With Chile we also have a friendly relationship that we have never had in the past. I can understand that there is a tendency to link Bolivia with President Chavez, but I fail to understand how people can reduce it to just a relationship between Bolivia and Venezuela and fail to see the huge phenomenon of what is happening with all the countries in Latin America.

Self-determination in Latin America
There is a movement for self-determination in Latin America. I can speak specifically about Bolivia and that the majority of people have chosen a president who actually represents them after 20 years of ineffective democracy. This is part of a trend throughout Latin America, where people are choosing new leaders. The Unite States cannot ignore that the people have elected leaders in a democratic way. The United States has shared with us the effort to strengthen democracy. Democracy has never been as strong or alive as it is in Latin America today. It is becoming truly democratic.

US-Bolivian relations
Things are going well. For six or seven months there was no ambassador here. Now there is an ambassador and the vice president has made two visits here, which has opened up the doors of communication. What we are looking for here is things that we have in common. Obviously there are differences between the two countries, but there are lots of points on which we can collaborate, and that is what we are working on.

Evo Morales’ popularity
He is absolutely more popular now than when elected, ten months ago.