Bolivia’s Uprisings: “It’s the Oil Stupid”

Here’s the latest.

President Carlos Mesa – who threw Bolivia into a political crisis ten days ago with a threat to resign and then decided not to – has come up with a new strategy to escape the Presidency early. He has proposed that national elections be moved up by two years. He wants Bolivia to elect a new President and a new Congress next August instead of in 2007.

Mind you, this isn’t England where that dates for national elections float and get set by the party in power to their best political advantage. In Bolivia, like the US, election dates are set by the Constitution.

Carlos Mesa, one of the nation’s foremost historians on the Presidency, is starting to look like a man looking for an escape hatch as soon as possible.

To be sure, Mesa is in an almost impossible political spot, with pressures coming from his right, his left, and from the powers of multinational corporations, the US Government, the IMF and the World Bank. But he did sign up for the job. He did present himself to the nation as former President Sànchez de Lozada’s running mate and it didn’t take much intelligence to predict that the five-year term would be rough. A leader who once held great respect even among his political adversaries is starting to look, well, sort of flaky.

For now, the Bolivian Congress seems reluctant to approve Mesa’s “get me outta here quick” plan, for both reasons of sober constitutional concern and partisan self-interest.

Let’s not lose sight of the real issue here, however. To borrow a phrase – “It’s About the Oil Stupid”.

Why did the elites of Santa Cruz spark a regional rebellion for political autonomy? Why are the current confrontations between that nation’s right, left, and center so heated that the government itself rests on a precipice? Why is Bolivia in a state of nearly perpetual conflict?

It is all about oil and it nothing unique to Bolivia. Nearly every poor nation on the globe that finds itself wealthy in mineral resources also finds itself in a state of political conflict. In the more extreme cases that means civil war. When you have something of real value to fight about, you start to fight. I wrote about this recently in my report on international oil and gas issues published by the Soros Foundation.

Bolivia sits on a vast treasure of gas and oil. Social movements want to assure that the profits are shared equitably. International oil companies want to pay as little as possible. Bolivia’s oil-wealthy regions want as much control (and local profit) as possible. President Carlos Mesa is stuck in the middle and starting to look weaker and weaker.

Mesa is also starting to look more and more like a President happy to dance to the tune of foreign oil companies, even though he knows better. His tax plan is full of loopholes which will end up getting Bolivia far les than the 50% of all profits that social movements are demanding and that used to be the system here before privatization (see my Blog entry from March 10th).

Foreign companies are singing that old familiar song, tax us more and we will leave the country. Mesa knows there is a lot of crying wolf going on. Here is what he told me when I interviewed him about the issue when he was still Vice President:

The great alibi, the great argument of the multinational corporations is legal security. The moment that you change your tax rules you are changing the rules of the game that establish the possibility that those companies will come and invest in Bolivia. With another set of rules that isn’t predictable, they say, “We wouldn’t have risked coming here. This would demonstrate tat this isn’t a serious country and would send a signal – Don’t come and invest in Bolivia because they say one thing and do another.

As anyone who has ever taken Economics 101 knows, how much you can charge a company in taxes before they decide it is not worth their investment is not an ideological question, it is a math problem. The companies want a complex taxing system that only a half dozen people in the nation will understand and that will end up passing off taxes to Bolivian consumers and coming up well short of a real 50/50 split.

Are social movements here misguided in taking such an extreme stand in their demand for a gas bill that delivers a real 50/50 instead of a fake one? I don’t think so. The long-term sale of gas and oil is critical to Bolivia’s future and people know it. Do I wish that the social movements could find a less-destructive way to press their demand than blocking roads and letting millions of dollars in crops rot in transit? Yes I do, but what that would be that would actually have power is unclear.

Is Bolivia politically unstable right now? Very much so. But keep in mind that political instability is often the road from one kind of stability to another. The US was nostalgically stable in the 1950s, based of course on racial segregation, grossly unequal treatment of women and little questioning of corporate practices. Bolivia’s relative political stability in the 1990s was based on a small and wealthy elite controlling the future of a large majority of poor. Starting with the water revolt in 2000, Bolivia has been renegotiating that power relationship issue-by-issue, uprising-by-uprising. The end game is afoot on gas and the road ahead is unclear.