New Internationalist

Bolivia’s next challenge to globalization

June 2005

Presidency hangs in the balance as the country refuses to knuckle under to Big Oil

Should I stay or should I go now? If I go there will be trouble An’ if I stay it will be double. Come on and let me know. - THE CLASH

IS Bolivian President Carlos Mesa holed-up in his room listening to old Clash records? Watching the country’s latest political drama unfold, it appears that way.

On Sunday 6 March the telegenic newscaster-turned-President took to the airwaves to announce his resignation. Caught between conflicting protests from social movements on his left and business groups on his right, Mesa told the nation: ‘I cannot continue to govern.’ None of Mesa’s major critics, from left or right, had called on him to step down. In fact Socialist Party leader Evo Morales made it clear that he thought Mesa had an obligation to continue. Nevertheless, within hours the country’s plazas began filling with Mesa supporters – a chorus from the political middle.

Then the President announced that he would stay and it seemed he had pulled off a successful ploy to strengthen his political hand. But the President overplayed that hand. Mesa called on the Congress to move forward national elections by two years – a move that was both unconstitutional and not warmly embraced among politicians who would suddenly have to run for election all over again. When his proposal was rejected the President threatened once more to resign, only to have his potential constitutional successors decline the offer. Looking increasingly flaky, Mesa told Bolivia in mid-March that he would stick out his term.

Behind all this ‘will he go or won’t he’ uncertainty is a pitched political battle over both oil and efforts to force foreign oil companies to increase dramatically the taxes they pay into the treasury of South America’s poorest nation. Until the 1990s, Bolivia owned its oil and gas reserves, the second largest on the continent. Foreign oil companies like Shell, Exxon and BP had contracts to get the oil out of the ground, then process and market it. They split the resulting take 50-50 with the Bolivian Government. Oil revenue accounted for 40 per cent of Bolivia’s public income. But when the IMF, World Bank and other cheerleaders of market fundamentalism coerced the Government to privatize gas and oil, Bolivia’s share fell to 18 per cent. Theory had it that giving the companies a bigger stake would cause production to leap and national oil revenue to increase. Instead revenues fell and a good portion of oil and gas taxes started getting passed along to Bolivian consumers.

Mesa’s predecessor, Gonzalo Sánchez de Lozada, was forced out of office over the oil and gas issue in October 2003. When public protests erupted over a plan to export Bolivia’s gas to California, Sánchez de Lozada sent out the troops, leaving 53 people dead and igniting a public backlash that sent him into US exile.

At the time of writing the Bolivian Congress and President Mesa are haggling over the final details of a new gas law, while oil companies are threatening to abandon the country if Bolivia demands a return to the 50-50 split. Bolivia’s debate over gas and oil is a common one to poor yet mineral-rich nations worldwide. Five years ago Bolivia became synonymous with resistance to market-driven globalization policies with its now-famous revolt against water privatization. Its handling of the gas and oil issue is quickly becoming a new symbol as Bolivians once again refuse to submit quietly to economic orders issued from abroad.

This column was published in the June 2005 issue of New Internationalist. To read more, buy this issue or subscribe.

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This article was originally published in issue 379

New Internationalist Magazine issue 379
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