Winds of change blowing hot


  • Letters
  • Monday, 08 May 2006

Last week’s dramatic gesture by Bolivian President, the indigenous leader Evo Morales, to nationalise his country’s natural gas resources is the latest sign of the winds of change in South America. More countries are abandoning orthodox policies and searching for new ways to achieve social development. 

THE winds of change are blowing strong in South America. While the change has been gradually building in the past few years, it became more evident last week when the new Bolivian President Evo Morales announced the “nationalisation” of the country’s huge natural gas resources. 

In a way, it should not have been a surprise, as Morales had promised to do precisely this in his election campaign. And in a 2004 referendum, 95% of the votes supported nationalisation. 

Bolivia is one of South America's poorest countries. The majority of its people are indigenous communities, and Morales is the first among them to be voted to the country’s top post. 

In a television interview on BBC a fortnight ago, he was articulate in voicing how the indigenous people had not benefited from the country’s development, how foreign companies had too much control of Bolivia’s resources, and that benefits must now flow to the nation, especially its poorer communities. 

UNDER WATCH: A policeman standing guard at a gas station in La Paz with a banner supporting the nationalisation plan. --Reuterspic

On May 1, Morales announced that gas resources would be nationalised. He gave foreign oil companies (the biggest being from Brazil, with others from Spain and the United States) six months to re-negotiate contracts with the government, and soldiers were sent to guard gas facilities throughout the country. 

It was a dramatic political gesture on Workers Day, and it grabbed the world's attention.  

La Paz is not seizing the companies’ gas installations, nor asking them to leave. It is asking to re-negotiate the terms under which the companies are allowed to operate in Bolivia.  

Still, when a small and poor country flexes its muscle, the more powerful tend to sit up and pay attention. This could be why there was an uproar, especially in the capitals of countries owning the affected oil companies.  

Spain said it was deeply concerned, and implied it may withdraw the debt relief it had agreed to provide to Bolivia. 

Brazil’s Petrobas is the biggest gas company in Bolivia, and Brazilians too were shocked.  

The Bolivian nationalisation plan is the latest in a series of developments marking change in the region.  

The continent fell under a debt trap in the 1980s, which depressed its economies. With debt rescheduling came the policies of the so-called “Washington Consensus” (made up of the IMF, World Bank and United States Treasury), centred on privatisation, trade liberalisation and tight fiscal policies. 

These policies did not work; growth rates were stifled, poverty rose and that unsavoury period termed “The Lost Decades.”  

In recent years, there has been a change in governments in Brazil, Argentina, Venezuela, Uruguay and now Bolivia, with free-market leaders replaced by those advocating a bigger role for the state, more nationalistic policies and greater stress on social development. 

Now all eyes are watching Bolivia, to see whether the oil companies will adjust to the new realities and accept new contracts, and if Morales can fulfil his other election promises, especially to lift the indigenous majority from centuries of poverty.  

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