Mexico’s President Pays a Visit – Step on the Gas

Mexico's President, Vicente Fox, dropped into Bolivia for a 24 hour visit Tuesday and the subject wasn't salteñas, it was gas. The timing of Fox's visit was not coincidental.

Bolivia, as I have written here many times over the past couple of months, is in the endgame in a national debate over what kind of deal it ought to cut with foreign oil companies regarding development of the nation's vast gas reserves. Bolivian President Carlos Mesa is pushing a deal much more favorable to those companies than the 50/50 profit split making its way through the Congress.

Hurry Up and Cut a Deal

Bolivia watchers may recall that is was a proposed sale of Bolivian gas through Chile to Mexico, and from there onward to California that sparked the protests in October 2003 that ultimately led to the ousting of President Gonzalo Sànchez de Lozada. Fox's visit is interesting timing.

It was that same Mexican gas deal, and the fear of losing it, that led then-President Sànchez de Lozada to turn to taxes on the poor instead of foreign oil companies in the run-up to Bolivia's bloody Febrero Negro [see The Democracy Center report].

The message communicated by the two Presidents, to Bolivian social movements and the Congress, could not have been more clear step on the gas, either pass a new export law or risk losing the deal. Fox talked about time limits inherent in the market. Mesa spoke about a new gas law making "negotiation [of a deal with Mexico] something viable."

A Few Points Worth Remembering

Here's a few points of reality worth remembering in all this.

First, Bolivia should absolutely export its gas. Doing so is one of the few real opportunities the nation has to lift itself up out of dire poverty.

Second, the vast majority of Bolivians, including the political leaders most at odds with foreign oil companies, also believe that Bolivia should export its gas and use the money to promote anti-poverty efforts.

Third, foreign oil companies are going to play some role in the development of Bolivian gas and even their harshest critics admit this.

The real issue is, in the end, how the government and the companies split the take. It is clear that some of the interests involved (the companies, to name one) would like to create an atmosphere of "better hurry, better hurry, the door is slamming shut." That's a fine tactic if your aim is to get a deal most favorable to the likes of Shell, British Petroleum and the others involved.

Most Bolivians, I think, do want a gas deal but they also want a good one. Good, in this case, means not getting ripped off, yet again, in the sale of their natural resources. The gas has been under the ground for a few million years or so. The world is also clearly running out of petroleum supplies and the demand for Bolivian gas is not likely to evaporate as time marches forward. How Bolivia decides this issue will determine its economic future for many decades.

I am reminded of a recent experience in which I tried to stake the tomatoes growing in my garden on the fly one morning, with whatever bits of wood I could find about the house. Each time, the tomatoes just fell back to the earth and into the waiting jaws of worms. Eventually it dawned on me that it was worth the time and effort to get it right. So, if you come on by I'll share some of the best, pesticide-free cherry tomatoes you ever ate.

The moral? Gas laws, like cherry tomatoes, turn out best when they are tended to seriously and allowed to fully ripen. Bolivians aren't interested in a gas export deal that ends up tasting like a green tomato, or one inhabited by hidden worms. President Fox may just have to wait a bit longer for his Bolivian gas.