Monday, May 24, 2010

Evo Opens A Gas Station!! *UPDATED 05/26/10

YPFB inauguró estación de servicio en Sucre
Lunes, 24 Mayo 2010
Sucre 24 mayo (AN-YPFB).- Con la presencia del Vicepresidente del Estado Plurinacional de Bolivia, Álvaro García Linera, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB Corporación), inauguró...
 While Bolivia's Oil Company, YPFB can  barely drill a well anywhere in the territory, it celebrates the opening of a Gas Station in Sucre as a big deal, with the Vice President Alvaro Garcia Linera on hand.  That is funny-pathetic, from a company that last year spent more than $4 million USD in 2009 on marketing and advertising - as in publicizing its "successes" as pretty much campaign ads for Evo prior to the December elections.  On the other hand, its 2009 budget for job training for its 1400+ employees (only 26% of whom are oil and gas professionals) was a paltry $260,000. Instead it spends money on silly things like gas stations.

Mind you, building and running gas stations is expensive and not that profitable.   Gas stations that handle thousands of gallons of fuel, and are poorly run can be easy pickings for theft.     YPFB started getting out of that business about 18 years ago, due to the corruption and drain of resources itf was for the State.   Ask most Bolivians about the quantum leap in quality and service provided by private gas stations - from the ones the State ran, or for that matter from the ones it is running now.

EDIT -   Bolivian oil expert Carlos Miranda, has a good piece on what a disaster it is that YPFB is opening gas stations.   It can be seen as a new "nationalization" of the sector, since private stations will now have to compete with the state monopoly with sole control of fuel production and distribution.   Making matters worse is that Evo's government destroyed the regulatory agency, repsonsible for regulating the sector.

Estimado lector tengo dos noticias, una mala y la otra peor.    La mala. YPFB está retornado a la venta de combustibles al por menor. Para operar ha reparado estaciones de servicio y está construyendo nuevas.  Continuará con esta política hasta llegar al control de esa actividad. Así cerraría el círculo petrolero estatizante desde la exploración hasta la venta en surtidores.

La venta al detalle es una actividad totalmente boliviana. Pequeños empresarios que han invertido cerca de $us 200 millones y son dueños de más de cuatrocientas estaciones. Por eso el gobierno y YPFB han tenido un poco de pudor y no se animan a decir que las van a nacionalizar. 

YPFB no tiene memoria, no aprenden de sus dificultades y/o errores pasados.  Ventas al por menor, cuando no hacen ni dos meses ha tenido una estafa en la venta de carburantes en Santa Cruz, que ha provocado retiros de personal incluyendo nada menos que a un gerente comercial!

Cuando se creó YPFB el país se abastecía de refinados peruanos,  transportado por llamas y expendidos en ferreterías. Rápidamente YPFB substituyó las llamas con camiones cisternas plateados con el logo de YPFB e instaló los primeros surtidores. A partir de 1954 sólo vendían producción nacional que abastecía plenamente la demanda en calidad y cantidad. Por eso YPFB está en el alma de los bolivianos.

Para reducir costos y personal después, decidió alquilar sus instalaciones. Sindicatos y partidos políticos se abalanzaron vorazmente a las concesiones de surtidores.  Como YPFB era la única instancia para autorizar la construcción de estaciones de servicio, se convirtió en el centro del tráfico de influencias. La implantación del Sistema Regulatorio puso fin al festín de corrupción. La Superintendencia de Hidrocarburos se hizo cargo de la autorización y control de las estaciones de servicios. En esa forma ha logrado más de 400 estaciones de servicio en el país, muchas de ellas en al área rural,  todas prestando servicio las 24 horas del día.

Ahora YPFB quiere volver casi un siglo atrás poniendo y administrando instalaciones propias para competir con las estaciones privadas. Con el sistema regulatorio, casi inexistente que pueda impedirlo,  se viene una competencia desleal dirigida a que los propietarios vendan a YPFB sus instalaciones a precio de “gallina muerta” y así evitar “nacionalizar” inversiones bolivianas. Ejemplo,  lo que esta sucediendo con AeroSur y BoA.

Pobres nosotros los usuarios, lo que nos espera: mala atención, horarios irregulares, adulteración de productos, etc, etc.

Sunday, May 16, 2010

BOLIVIA - - Evo Morales' Industrialization Schemes FAIL, while Peru laughs all the way to the bank

Remember the Gas War? October, 2003, many Bolivians had a meltdown over a proposed 1.5 billion dollar project to export Liquid National Gas; a pipeline would send Bolivian gas to a new liquification plant and port complex to be built in Chile.   The outcry, in the context of a full mobilization by angry Cocaleros and disafection over economic recession (among many factors), ended with dead protestors and the forced ouster of the Constitutionally elected President.    Evo Morales a vociferous opponent of the project and guiding force behind many of the mobilizations that had paralyzed the country since 2000, was elected President in 05 to recover Bolivia's national resources from ugly multinationals, and to industrialize the mineral wealth of the country instead of exporting only raw materials.  

Build It And They Will....Nationalize It....

Evo, to the acclaim of some and the hope of many, signs a contract with Jindal Steel, a very large Indian Steel Company to mine an enormous iron ore deposit near the Brazilian border.      Jindal in a joint venture with the Bolivian State, agreed to invest over 2 billion dollars to not only mine the ore, but to build production facilities for steel and iron production.    Regardless of whether you like Evo or not,  it actually seemed at the time to be a win for Bolivia,.   The mineral rich Mutun, had been eyed for decades by past Bolivian governments for its potential, but nothing had gone through, now seemed as good a time as any.

Three years after the signing and approval of the whole deal.     The project is paralyzed, with Jindal ready to bail out.  Some of it seems to be due to Evo's dubious choices to run the Bolivian side of the deal, who were political appointees - labor leaders to be more precise.   Bolivia did not provide all the land (arguably it did provide most), but failed to build the roads needed and other infraestructure.   The company was supposed to invest at least 600 million, instead it spend about 20 million to build some offices, and to mine the ore for export as raw materials.   Morales' record of further "nationalizations" of foreign companies, constant rants against capitalism and the private sector, and the rather confusing Constitution might also have made the Indian conglomerate nervous, to the point where they would forfeit a 20 million dollar bond to get out of the deal.   Some common sense and direction, and the thing can probably be restarted, as of now its in limbo.

Where The Air Is Rarerified

While this entire process went from courtship to failure, in next-door Peru, a consortium to build a large LNG plant connected via a pipeline to Peru's largest gas fields, was taking shape.    It was started around the same time that Bolivia was having its massive meltdown over gas in 2003, the original concept was to be an alternative to Chilean ports for transporting Bolivian gas. But then it evolved more into exporting Peruvian production.    The project was approved and financed and the decision to go ahead was made in late 2006 - more or less while Evo was finalizing gthe deal with Jindal.

Well, as of April 2010, the full project - the largest single foreign investment in Peruvian history at close to $4 billion dollars - is almost ready.  The pipeline that runs through the Andes and desert is done, the docking facilities for the tankers and the processing plants and storage facilities are almost finished.    That is the speed with which private and public projects with backing, know-how, and leadership advance.    

Evo Cumplido

   Bolivians should take a look at what is being finished in Peru - they could have had something similar.  Arguably the Chile LNG plant would have been finished and exporting gas by now.   Ironically, the proposed project facilities in Chile - partly-owned by the Bolivian government - included a petrochemical facility.  It would have meant  Industrialization.  Bolivian natural gas used as raw material for Industrial goods.  Instead they have Evo whose four years in power have consisted of dramatic media spectacles like nationalization, constant political campaigning and propaganda, while living off the bounty produced by record world prices for things like hyrdrocarbons, in industries whose very existence is mostly due to the sectoral policies of  previous governments.

The Morales' governments socialist ideology and mania for centralization gives increasingly larger responsibilities for the State in the economy.   However, the only "nationalized"sector it runs well seems to be  mass media,  as it keeps on buying newspapers and other media to proselitize further.   What that media won't be reporting are things like the fact that in four  years of Evo's nationalized State Oil Company, YPFB, not one new discovery has been made,  only three wells were drilled last year (versus 64 in 2000, and more than 100 in Peru), and the country has to import gasoline for the first time in decades.   Blame a MAS government whose strident rhetoric and erratic behavior have chased away foreign investors.   A government that follows discredited economic policies,  places party-line over competence, values ideology more than technical or managerial know-how,  whose regulations have made its administration less transparent and accountable,  is prone to corruption, and is just plain inept.   To put it bluntly, it can't run a damn thing even with money in the bank. 

Evo's government takes it further; the MAS administration is incapable of even delegating and overseeing projects, where friendly investors do most of the actual work and spend most of the investment money.   Mutun is an example of four years of doing, absolutely nothing, except speeches about how great it is,   During that same time period the Peruvian government happily enabled a mega-consortium to build a huge export facility, port facility, and not to mention a large pipleine that crossed over mountains and deserts.  And that the project has spurred billions of dollars in investments in natural gas production, raising Peru's proven reserves - still nowhere near Bolivia's.   Considering the fact that at least one of the investors was involved in the Bolivia LNG project it is not farfetched to say that Peru LNG money originally was destined to be invested in  Bolivia, but ended up next-door, as have billions in exploration and production investments.   End score - Bolivia does not have a pipeline to the Pacific and a LNG processing plant and port on the Pacific, and neither does it have an operational steel plant making steel for domestic industry or export using Mutun iron ore.  Thats a lose-lose situation.

What could have been.?..


This is very, very good.   Glenn Beck as of 2008, complaining about healthcare - as in care he received while sick- in his usual crybaby fashion,. Then as of 2010, of course Obamacare is evil Jon Stewart on the Daily Show demolishes him.

thanks to My Favorite Jon Stewart PWNS

See Beck-tard get all personal in that piece... there is a method to his loony weepiness.
The crying conservative how Glenn Beck Taught His Feminine Side to Turn Tricks

Friday, May 14, 2010

Wrecking Venezuela - More From The Economist on Chavez

The unraveling of the Caracas Consensus continues unabated,

[President Hugo Chavez] threats against Colombia—which include a total trade embargo if Juan Manuel Santos, a former defence minister, wins this month’s presidential election—and the evidence of his veiled support for the FARC are troubling. They are a constant, if so far manageable, source of regional tension. And his efforts to build a block based on self-proclaimed “revolutions”, anti-Americanism and managed trade in the heart of democratic Latin America have served to undermine the very cause of regional integration that he claims to champion. But rhetoric aside, his influence in the region peaked a couple of years ago. He lost one ally, albeit in regrettable circumstances, when Honduras’s president, Manuel Zelaya, was overthrown last year. Several others are on the defensive.

Much more important is the damage Mr Chávez is doing to his own country. His “21st-century socialism” is a precarious construction. The brief fall in the oil price of 2008-09 was enough to sink Venezuela’s economy into stagflation—even as the rest of Latin America is enjoying vigorous economic recovery. Venezuelans are suffering declining real wages, persistent shortages of staple goods (meat is the latest to become scarce) and daily power cuts.

The blackouts are in part the result of drought. But they are also the most dramatic sign that the bill for a decade of mismanagement of the economy and of public services is now falling due (see article). There are plenty of other ugly portents. In one of the world’s biggest oil exporters hard currency is running short: to buy a dollar in the tolerated parallel market now requires almost twice as much local currency as the official exchange rate (and three times more than the privileged rate for “essential imports”). Investors rate the country’s debt as the riskiest of anywhere. Crime and corruption are flourishing.

Time to pay the piper Hugo

Thursday, May 13, 2010

The Economist - "Hugo Chávez's Venezuela Feeling the heat" Caracas Consensus Crashes

But for the time being the Bolivarian revolution (named after Simón Bolívar, South America’s independence hero) faces unprecedented difficulties. Everyday life is getting harder for Venezuelans. While the rest of Latin America is recovering strongly from the world recession, Venezuela is slumped in stagflation. The boom came to an abrupt end when the oil price plunged in the later months of 2008. Although it has since risen again strongly, Venezuela’s economy has not (see chart). Mr Chávez last month accepted that it “could” shrink again this year, confounding earlier official forecasts of growth. The IMF projects a contraction of Venezuela’s GDP of 2.6% this year, after a fall of 3.3% last year. By March, average wages (allowing for inflation) were 15% below their peak of 2007.

What’s in a BRIC? - Project Syndicate

Joseph Nye, argues that the BRIC acronym, "makes ilitte sense for long-term assessments of global power relations"  particularly when it comes to the R - as in Russia.

While a BRICs meeting may be convenient for coordinating some short-term diplomatic tactics, the term lumps together disparate countries that have deep divisions. It makes little sense to include Russia, a former superpower, with three developing economies. Of the four members, Russia has the smallest and most literate population and a much higher per capita income, but, more importantly, many observers believe that Russia is declining while the other three are rising in power resources.
Brazil in Nye's view does come across pretty well - 
Since curbing inflation and instituting market reforms in the 1990’s, Brazil has shown an impressive rate of economic growth in the range of 5%. With a territory nearly three times the size of India’s, 90% of its 200 million people literate, a $2 trillion GDP equivalent to Russia’s and per capita income of $10,000 (three times India’s and nearly twice China’s), Brazil has impressive power resources. In 2007, the discovery of massive offshore oil reserves promised to make Brazil a significant power in the energy arena as well.

Ultimately,  it will not become a "serious political organization"  of like-minded states" more like a group of countries that do well economically.

So, how seriously should analysts take the term BRIC? As an indicator of economic opportunity, they should welcome it, though it would make more sense if Indonesia replaced Russia. In political terms, China, India, and Russia are competitors for power in Asia, and Brazil and India have been hurt by China’s undervalued currency. Thus, BRIC is not likely to become a serious political organization of like-minded states.
What’s in a BRIC? - Project SyndicatePosted using ShareThis

Tuesday, May 11, 2010

Why Naomi Klein is Really Stupid - Bolivia version

Among the most inane and just plain absurd deifications of Evo, is this gem by hard-left idiot extraordinaire Naomi Klein,  Klein's nonsensical worldview and silly ramblings were perfectly skewered by Jon Chait in a classic article. in The New Republic.   Now she goes to Cochabamba, for Bolivia's People Summit on Climate Change enlightening us on how Evo Morales can literally save the world, or something close to that.  No, I am not kidding, you can tell where this is going just from the title of her article: Bolivia's fight for survival can help save democracy too.

It was 11am and Evo Morales had turned a football stadium into a giant classroom, marshalling an array of props: paper plates, plastic cups, disposable raincoats, handcrafted gourds, wooden plates and multicoloured ponchos. All came into play to make his main point: to fight climate change "we need to recover the values of the indigenous people".
Naomi seems to think this pearl of deep thinking,  just sums up how great Evo is.  Evo's indigeneous values?  They owe more to the Cuzco Emperor's -whose scorched-earth tactics finally brought what then was known as Kollasuyu into the Inca' Empire-,  than with the worship of a benign Gaia-like Pachamana, imagined by New Agers and Environmentalists. 

Not content with that, she says that Bolivia's rhetoriticians can offer us real solutions to the crisis of "failed democracies" and "global warming". 

With the Cochabamba summit, Bolivia is trying to take what it has accomplished at the national level and globalise it, inviting the world to participate in drafting a joint climate agenda ahead of the next UN climate gathering in Cancun. In the words of Bolivia's ambassador to the United Nations, Pablo Solón: "The only thing that can save mankind from a tragedy is the exercise of global democracy."
If he is right, the Bolivian process might save not just our warming planet, but our failing democracies as well. Not a bad deal at all.
So how can Bolivia be an example for the World?   Is Klein thinking of Evo's version of State-Capitalism? His "neo-extractivism" comes with the usual environmental oversight and transparency common to the old Eastern block countries. Environmentally sound?  Evo's Cocalero allies are chopping down trees in national forests to grow coca, run-off from the increased coca processing plants is polluting even Lake Titicaca.   Democracy?  His version of democracy seems to have more to do with centralist dirigismo  and "smashing oligarchs" than it does with "grass roots" ground-up democracy.  

Forget the world, Bolivia's neighbors Peru, Chile, and Brazil  pointedly avoid most of the Evo-agenda.  They all seem to do rather well economically with their forms of social-democratic capitalism, while avoiding the messy authoritarianism and cult of personality around Morales.   For all Klein's rants against the Washington Consensus, countries that have followed the "Caracas Consensus" policies advocated by Chavez and Morales have done pretty bad, a fact that she would never concede.  Anyways.

Ironically, many affected indigineous people were shut out of the conference. Seems they might have issues with some of the State's development ideas. And Evo sure made Naomi prouder, by going on about gays, chickens, and bald people to everyone's amusement. Except for proud neo-Stalinist Naomi, who is too stupid to get it.

Evo Nationalizes Energy Companies - Part 2

As reported before, Evo Nationalized several electrical companies.  Now Britiain's The Economist weighs in-

Since taking office in 2006 Mr Morales, Bolivia’s first elected president of indigenous descent, has taken over oil and gas, mining and telecoms businesses. Partly as a result, he is popular. When campaigning for a second term in an election last year, he promised that power companies would be next. The targeted firms thought they had avoided this fate by negotiating a deal in which the government would take a bare majority stake. No such luck.
But the May Day nationalisation seems to be bringing Mr Morales diminishing returns. To his bemusement, workers at one of the nationalised companies, a co-operative in Cochabamba, staged a protest sit-in. Although Bolivia’s gas revenues have risen sharply, that has as much to do with higher prices and contracts signed before Mr Morales took office as with rolling back privatisation, according to Carlos Alberto López, an energy official in a previous government. Most of the newly state-run firms have performed poorly.

South America - State Oil Companies While Colombia has record production, Bolivia and Venezuela are a Mess

Colombia's State Oil Company Ecopetrol is exporting record amounts of crude this year.

Bolivia's State Oil Company, YPFB after 4 years of Evo has turned Bolivia from being self-sufficient in most fuels and natural gas products, into a country that imports gasoline (even from Chile!) and liquefied petroleum gas (from Peru).   Gas production is static, despite the record prices and South American demand.    In 1999 there were 65 wells drilled in Bolivia, in 2009 there were 3 (three.)    Four years of government has meant six different CEO's for Bolivia's National Oil Company.  One of the exes is in jail, result of the worst scandal in YPFB company history last year.

Venezuela's PDVSA - once the flagship State Oil Company in the region, is producing a million less barrels of oil per day than it did in the 90's, it is a mismanaged mess, that is deeply in debt. 

Reason:  Colombia has a sensible hydrocarbons policy, in which the State plays an active role, while also allowing foreign participation and investment.   Bolivia and Venezuela do not - in many cases directly due to conscious policies in the last four years that reversed the modernization reforms of the 90's. 

Colombia, laws and regulations, modified in 2004, provide a comprehensive framework for the hydrocarbons sector.  Centuries of obsessiveness with the language finally pay off  in areas other than Magical Realist novels, as the carefully drafted legislation seems pretty clear and comprehensive.  Starting with the Constitution and the relevant legislation, the Country's laws set out clearly delimited areas of responsibility and accountability for all actors in the energy sector. The Ministry of Mines is responsible overall for the extractive industries, the Unit for Mining and Energy Planning (UPME) is responsible for research and planning future energy needs,  a unit of the Ministry of Mines, the ANH  administers the hydrocarbons sector - both private and state companies,  the regulatory agency  CREQ regulates the energy market of which natural gas is a part.  The National Oil Company, Ecopetrol, is the leading oil company in the country.

Ecopetrol unlike YPFB or PDVSA,  is not granted a monopoly on production, and is expected to be another competitor in the market..   To make sure it is competitive under this scheme, Colombian legislation ensures Ecopetrol has managerial autonomy, follow standard corporate rules and procedures, and pretty much operates as a modern international hydrocarbons company.    And to raise investment funds, it adopted a novel scheme.  it raised capital through stock offerings,  selling 20% of its shares in offerings in which Colombian citizens had first-right to buy, and there was a monetary and percentage cap as to how much any one individual could buy, to ensure national and "democratically" distributed ownership.   With this financing it has begun an ambitious cycle of investments that will boost Colombia;s coffers.

As part of its plan to increase investment and expand the industry, Colombian law allows private and foreign companies of all sizes to participate in the upstream and downstream part of the hydrocarbons business, either individually or as partner with Ecopetrol.   Colombia's current legal system, has laws that protect private investment.     As a result of this security foreign investment  in hyrdrocarbons has soared,  exceeding  3.5 Billion dollars a year for the past couple of years.

Drill Evo Drill

On the other hand, Bolivia's newly Nationalized Oil and Gas sector is arguably less transparent than it has been in the last 15 years.   Evo got rid of the somewhat competent independent regulatory agency that  "neoliberal" governments had set up, placing those responsibilities within the same ministerial bureaucracy.    Instead of openly soliciting bids for joint ventures or other projects, the government in past years has enacted decrees unilaterally picking partners and setting up ventures with foreign companies with little oversight.and questionable legality.  To make matter worse, the management of  the State Oil Company YPFB, starting right from the Morales governments inaguration has been politicized and de-professionalized, with corruption scandals of all sorts and incompetent decisionmaking and planning.  This sorry state of affairs has succeeded in stalled production.
While Venezuela at least on paper allows for foreign participation, Evo's Bolivia has policies described by one analyst as "tougher than Cuba's", limits all activities related to hydrocarbons exploration, production, and commercialization to YPFB, though it can sign limited contracts with outside companies.  But even these service contracts are in a sort of legal limbo due to the inconsistencies - and outright confusion- in the new Constitution.  As a practical matter,  the decrees, laws passed since 2005, and the new Constitution do not provide a comprehensive set of rules of the game, to put it simply.   It is hard for the players in the Bolivian hydrocarbons sector to know where they stand, and that is true even for the State!  Marcelo Quiroga Santa Cruz is probably spinning in his grave.    Small wonder that investment by foreign companies in Bolivia have dropped dramatically.    Forget harsh government rhetoric, having a Constitution that when it is not being stridently anti-capitalist  is confusing and vague when talking about  the extent of the States right to contract over resource rights, to private property rights and protection of investments,  does not seem like a good place to invest in.

Venezuela and Bolivia's have followed a failed statitst model,  For all the talk about Bolivia's "democracy from below" in the words of Evo apologist Jim Schultz, its so-called alternative to "neoliberalism" is bankrupt at its core.

The key here is that countries like Colombia that are doing well,  and are doing so outside of the stereotype of the neoliberal/washington consensus/imf bogeyman..   Ecopetrol is a nationally-owned State Company like Yacimientos or PDVSA.  But Colombia has built a framework that allows its State-owned company to thrive, while allowing foreign companies with their technology and know-how to actively participate in exploration and production of hyrdrocarbons.  This may not be the best system out there, but at least it ensures Colombias public coffers grow, and the industry longs well poised in the long-run.     Bolivia, sadly, seems to prefer to imitate the State Oil Company in Venezuela, instead of the one that works in Colombia.

Monday, May 10, 2010

Bolivia's "Tea Party" - 10 Years Since Cochabamba Water Wars

Its been 10 years since the Cochabamba "Water Wars".     Evo Morales' "unofficial" press agent  (thanks to George Soros ) Jim Schultz at the Democracy Center - has the usual self-congratulatory piece about this.   The Bolivian Water Revolt, Ten Years Later,  reminding us of this.

In this complicated story the movement that went from a social mobilization opposed to water rate hikes to a  movement marked by a political-ideological component, that of fighting neo-liberalism, calling for the unconditional expulsion of a multi-national consortium from Bolivia in the words of one Bolivian observer.

 Evo Morales' cocalero Union played a "large part" in that victory, which led Evo to shrewdly see the possibilities of linking the Unions fights against erradication with the disparate indigenous, anti-neoliberal and anti-globalization movements in the country. 

Ma-te Party

This Coordinadora movement became more about an ideological extreme position rather than one of negotiating for an end;  to use the hard-left term it was making "transitional demands" on the government, asking for the expulsion of the company rather than modification of the contract.   It was using language and rhetoric that  resonated with many of Bolivia's poorer citizens, playing on long-bottled frustrations and resentments against traditional politicians, the old oligarchy, and the ever-present fear of foreign control of resources.  What Dunkerely called "the Potosi Syndrome"  It was about passions, and yes, prejudices and fears,  held by many Cochabambinos including a xenophobia and distrust of outsiders.

  In many ways this is like the irrational part of the "Tea Party" movement in the U.S. that brings out the insecurities and the fears of some Americans.   Calling Obama a "socialist" and drawing imaginary lines in the sand against government action,  avoids entirely the practical problem of 25 million plus Americans who have no health care.   In  the case of the Coordinadora it was extreme anti-capitalistic, anti-american rhetoric, hysteria over stopping "multinationals"from "pillaging": the countries resources,  avoiding rational discussions of possible private/public solutions that could make sure people in Cochabamba got water in an efficient, modern, and reasonably priced manner.  


One of the Water Wars leaders calls it the“first great victory against corporate globalization in Latin America." It is this defiunition of victory that is celebrated by Schultz and company, even while they have to admit that the "social" movements have failed to implement the objective that everyone agreed upon - which was to improve the supply of water to the residents of Cochabamba.  Tom Kruse, another scholar-activist wrote that  “while you can’t drink the rhetoric of antiglobalization, struggles like the water war are vital, and the only hope for rebuilding a progressive agenda."    That is little confort to the poor Cochabambinos still do not have an adequate supply of water, a fact that Schultz acknowledges.
1. The Cochabamba Water Revolt was and remains a powerful David and Goliath struggle in which some of the most humble people in the world took on the forces of the World Bank, Bechtel, and a former dictator, Hugo Banzer, and took back a resource essential to life – their water.

2. Nine years later the public company reborn from that revolt, SEMAPA, is marked by an ongoing history of mismanagement and corruption which, combined with Cochabamba's rapid population growth, has left much of the city without the basic water they need and deserve.

In other words, Cochabambinos won the war in the streets but lost the battle to have honest and competent water service. In my chapter on the Water Revolt I was frank about this paradox, and have continued to be in my recent talks in the U.S.

What Schultz doesn't mention is that he has continued to beat away at #1, the variation of the familiar narrative.  David could beat Goliath, in this battlefield, then this could apply to the entire evil of "globalization", the washington consensus, neo-liberalism, which was "imposed on Bolivia", etc., etc..     For the past 10 years Jim Schultz and The Democracy Center have used Cochabamba as a justification for reversing policies that actually worked, and as a blanket justification for Evo Morales' misguided and impractical "solutions" like nationalization.   

Even critics of the Coordinadora concede that the Aguas De Tunari  concession was a "very bad deal", though as Roberto Laserna said it was "negotiable" implying that solutions like a freeze on water rates could have been bargained for.   But rationally, one bad deal, should not condemn other private or public foreign capital deals in Bolivia.   Brazil's State Oil Company contract to invest billions in exploring and producing national gas - with World Bank finance for the pipeline, was an undisputed success, that was negotiated in an entirely different time and space than the Aguas De Tunari deal.   No matter for Schultz and company, anything having to do with the IMF, pre-Evo governments, is inherently bad.   Evo's failed nationalization  policies have been spun as victories for the Bolivian people by The Democracy Group, to borrow the title of the Groups book:  Dignity and Defiance, Bolivia's Challenge To Globalization.


What Cochabamba produced was a perfection of a political discourse and ideology, that would appeal to many poorer Bolivians, and which would provide a rallying point for the social movements that catapulted Evo Morales to power.    These themes guide the government, and more ominously have been enshrined in Bolivia's Constitution where they will constrain future governments.  Not only is the Constitution rigid in many aspects including economics, it is also confusing and inconsistent  product of the internal contradictions of the ideological smorgasborg that produced it:  Indigenous sovereignity over land, and government control over underground resources is one telling example of the many potential headaches.    

Then there is the matter of practical governance.   Bolivian government comes with an ideological straightjacket, that forces the government to act within very narrow paramaters,  especially in economic policy.    Evo's recent calls for foreign investors sound hollow and insincere, since most official statements and actions show a predisposition to nationalize everything foreign owned    But, according to what MAS stands for, it necesarilly must nationalize everything in order to hold up what its been preaching.  
Anti-Americanism - never as harsh before the Cocaleros as it was in other Latin American countries has led to a useless conflict with the U.S.  Obsolete Marxist (or pseudo-Marxist) views of economics  suffused with traditonal Bolivian and Indigenista strains of resource nationalism,  are a recipe for failure and when it comes down to it, anti-modern.   The ideological cocktail with its mix of indigenismo, anti-americanism, social mobilization, and victories over Bechtel and later Oil Companies, while disastrous to Bolvia and inefective as policy, is irrestible to foreign observers, obsessed with anti-globalization themes.   Great as an exportable tale for foreign consumption, bad for anything real.  

 Just how destructive, is visible in  the follow-up to the Water War, the Gas Wars: was over a contract that would have involved Billions of investment in Bolivian gas fields and infraestructure, including a port in Chile to export Liquid Natural Gas -  a deal cruelly dismissed by Schultz as "Cheap Gas for Chile".  A government fell, investments dropped, and as a result billions of foreign investment have gone to Peru (with less gas reserves),  and Chile, Brazil and Argentina invested billions in facilities to import Liquid Natural Gas owing in large part to the unreliability of Bolivia as a supplier..  But to Olivera, Schultz, and company it was a great victory for people power!!!   You don't want to bother with such things as facts.

Wednesday, May 05, 2010

Newtered | The New Republic

Norman Ornstein (hardly a leftwinger coming from AEI) on the silly claim that Obama is socialist -"Smacking down Gingrich’s claim that Obama is ‘the most radical president in American history.’

Newtered | The New Republic

Forget Offshore Drilling Until We Get Some Answers | The New Republic

Forget Offshore Drilling Until We Get Some Answers | The New Republic

Troubling questions about the huge oil spill from the BP platform. Technology like that used by Brazil oil giant Petrobras, in their off-shore drilling platforms, might have help prevent the spill. There are troubling questions about why this was not mandated by the government. Specifically the Bush administration whose lackadaisacal regulations favored industry over the public. Key points: there has to be proper regulation, oversight and transparency of private sector operations which can harm us all. Am on record as opposing offshore drilling - but with successes in Brazil and Norway I was coming around. Way on the fence now.

Sunday, May 02, 2010

Evo Nationalizes Energy Companies

May Day Media Spectacle  "POWER!!!"

 Evo Morales following his previous May day tradition, has nationalized energy companies - from foreign and national owners, securing 80 percent of the electrical production and distribution is in state hands.

Note- This is not strictly a "nationalization" of a "private" or "privatized" company, the energy companies in Bolivia were never "privatized" or sold outright to foreign/private capital to begin with. . Most of the companies involved were companies where the Bolivian State held part ownership in association with private capital which managed them. Some companies had foreign investors, but others were Bolivian-owned, in the case of Cochabamba's company the workers held a large share of the stock. '
In fact, what the State is doing is a "forced" buyout of the rest of the stock in these companies, and assuming management control.

What this means,

First of all, there is always disputes over compensation for the value of these companies, inevitable in any transaction.

Potential international litigation. There are French and English companies who still have the right to contest this under investment-protection treaties.

Foreign Investment
- The spectacle of soldiers taking over power plants, right after Evo Morales sent his Finance Minister to the U.S. to look for foreign investors, this simply confirms the governments unreliability, and double-talk.

This usually doesn't work. Venezuela bought out foreign and private interests in the energy sector under Chavez. Result - mismanagement with a power grid close to collapse. Colombia on the other hand, broke up its state monopoly, created a regulatory framework to ensure adequate delivery and consumer protection, and allowed private sector participation. It now produces enough energy to offer electrical power to blackout ridden Venezuela.  Bolivia's next door neighbor, Peru, also did something similar and has managed to accomodate that country's increased demand for power, reached remote customers, while offer stable rates for customers, 

Paradoxically, the MAS government has dismounted the regulatory bodies - Superintendencias- placing responsibility for supervision and consumer protection with the same ministry that will theoretically also be responsible for the entire chain of production, transportation, and sale of power to consumers and businesses.

Evo's record of running anything besides political campaigns is disastrous
. this could result in politicized appointments, incompetent managent, less transparency and consumer protection, reduced independent oversight, and even corruption.  The classic case is the do-nothing Oil Company, YPFB which has been rocked by scandals, since Evo took over, and has turned Bolivia from being self-sufficient in oil products to buying even gas from Peru..

Evo Morales and the Populist Paradox --

Bolivian Economist Roberto Laserna has deconstructed Morales policies, Evo Morales and the Populist Paradox (in Spanish here), exposing the reality that he has benefitted:
1. From Neoliberal economic policies that created the climate for investment and set in motion the industries that are now generating income for the country, and
2  Political policies from "Neoliberal" governments that opened the political space for Evo Morales rise, and created institutional mechanisms that allow the government to transfer resources to many communities. . That would be the municipal decentralization and local community budgeting laws passed by Sanchez de Lozada in the mid-90's.

Private investment in the mid-1990’s, moreover, increased output of natural gas. Soon gas was being exported – very profitably – to Brazil. Thus, when Morales came to power, Bolivia’s economy was in a position to take advantage of the global price boom for raw materials. As a result, revenues increased, despite his government’s nationalist and statist policies, which drove away investment and hindered access to new markets.

Since 2005, Bolivian exports have increased six-fold, along with fiscal revenue. This money is distributed automatically to local governments, according to the model established by Morales’s predecessors, carrying resources to the farthest reaches of the country. But it is not only local governments that have benefited; through cash transfers created during the so called neo-liberal years, families have gained as well, most importantly through a universal and non-contributive old-age pension benefit given to persons over 60, which reaches slightly more than 30% of households.