Gas Update – Congress May Bypass President

Tomorrow morning (Monday) is when we get our first glimpse of the promised explosion of street pressure aimed at pushing the Bolivian government to adopt a gas and oil law that truly benefits the Bolivian people. Meanwhile, a few developments and comments.

Congress Considers Sidestepping the President

This morning’s Los Tiempos newspaper in Cochabamba leads with an article saying that the Bolivian Congress is considering bypassing President Carlos Mesa entirely and implementing the Congressionally approved gas law on its own. Mesa has threatened to veto the gas bill and is reportedly readying a new one more to the liking of British Petroleum and the other companies. The Bolivian constitution allows for the Congress to implement the law without the President’s approval (roughly the equivalent of overriding a US Presidential veto) and a move is apparently afoot to do so.

Further, the newspaper reports, the move has the support of all the major political parties in the Congress, including MAS, the Socialist Party led by Evo Morales. The paper quotes a MAS Congress member as saying that the party would support the new law as a vehicle to block Mesa from weakening it and would then begin a campaign for a modification to the law to “nationalize” Bolivia’s gas and oil.

Some Analysis

The combination of MAS backing the new Congressional gas law and joining in street pressure for “nationalization” isn’t a bad strategy. It helps lock into law the most “progressive” viable alternative currently on the table but leaves the door open to ratchet it up to something even stronger in terms of returning control of the gas and oil to the Bolivian public. It also makes MAS look politically reasonable, which it needs to do as part of its longer-term strategy to eventually win the presidency.

That said, it is important to look beyond the rhetoric of “nationalization” to the actual policy questions involved [I am a closet Harvard-trained policy analyst, but please keep it a secret]. In the end the story that counts is the actual requirements of the law, not the rhetoric involved.

None of the major political actors, including MAS are disputing that foreign corporations will play some role in exporting Bolivian gas. The two most critical questions are:

How do Bolivia and the companies split the profits?

Who controls the volume of production, the sale price, and other details?

The answer to the first question lies in the formula that the Bolivian government adopts for taxing the companies. The rallying cry for months has been “fifty percent!!” and the new law approved by the Congress includes a 50% formula. However, these taxes are wickedly complicated and I think there may be half a dozen people in the country who can tell you what the formula really means. Has Congress approved a real 50% formula or a fake one? I can’t tell you for sure, but we’ll be working on finding out this next week.

The answer to the second question lies in what has become the demand for “nationalization”. In the current debate nationalization doesn’t really mean that the Bolivian government would take on the job of pumping gas and oil out of the ground, processing it, piping it to the coast, and selling it directly to end users. In the current debate nationalization really means control – control of how much gas gets pumped out how fast, of who it gets sold to and at what price.

Democracy in Action

Remember, in the midst of all the conflict this week in Bolivia, something remarkably democratic and hopeful is happening. In poor nation after poor nation gas and oil deals like this one are debated and enacted behind closed doors without the public having any real understanding of the issues or opportunity to shape the outcome [Note: For more on this see my recent book on the subject, Follow the Money.]. The Bolivian people, plain and simple, are saying that they won’t get left out or ignored. The fact that people are willing to march, to protest, to study, and to have strong opinions is not something to be feared but something from which the rest of us ought to draw incredible inspiration.

The alternative is to do as my fellow Californians did when Enron manipulated energy prices and fleeced them for billions a few years ago. The people of California, unlike the people of Bolivia, just paid the bill and just plain let themselves get rolled. Bolivians do not take such abuses so lightly.