Latin America demands more for its oil and gas

Leading the pack is Venezuela, the world's fifth-largest oil exporter. In the past year, Chávez has gradually asserted more state control over oil production, targeting joint ventures first. He has declared May 1 as the deadline for state majority control in the extra-heavy oil products in the Orinoco River basin. Analysts expect the natural-gas industry to be among the next targets, says Mr. Bailey.

Following Chávez's lead?

In Bolivia, many say Chávez inspired Morales's nationalization plan.

"[Morales] echoes the threats that Chávez makes about nationalization. They have the same goals. I don't think Morales tries to hide that," says Napoleon Pacheco, an economist at the Millennium Foundation in La Paz.

Chávez's influence in the region cannot be underestimated – not just the discounted oil he ships around the region but his plans to reduce dependence on the US. He has promised Bolivia some $1 billion to invest in petroleum projects and recently announced he would help the country explore new natural-gas sources. He announced an initiative for natural-gas exporters in the region based on the principles of OPEC. The most ambitious plan is a $20-billion pipeline that would send Venezuelan natural gas all the way to Argentina. Morales may be ahead of him on that one, having inked a deal last month with Argentina to build a gas pipeline that will quadruple the amount of gas Bolivia exports to its southern neighbor.

Many analysts, however, say that resource nationalism has little to do with Venezuela. "It is true that Chávez is the main advocate for taking advantage of a favorable energy market and trying to squeeze foreign companies as much as possible," says Michael Shifter, who recently authored a report on the challenges the Chávez administration poses to US policymakers. "But the kind of 'nationalization' being carried out by the Morales government stems from Bolivia's own particular circumstances, and the mounting pressures of the country's poor, indigenous majority to get what they see as their rightful share of the national wealth. Even without Chávez on the scene, it is likely we would be witnessing such a move in Bolivia today."

That is the case in Ecuador, too, where protesters forced shutdowns of pipelines throughout the Amazonian basin.

"We should be the bosses of our own resources," says Adolfo Chávez, the leader of the Indigenous Confederation of Bolivia in Santa Cruz, where the country's natural resources lie. "It is because of the demands of the indigenous that things are changing."

In the past two decades, fiscal sense has been dictated by institutions like the International Monetary Fund, extolling free-market practices and a climate friendly to foreign investors. In raising taxes on foreign firms, Bolivia is bringing in another billion dollars, says Jim Shultz, a political analyst in the Bolivian city of Cochabamba. "It's exactly the thing economic theories say you should never try to do. But the companies are all still here."

But critics worry about the long-term impact on foreign investment. Brazil and Bolivia have, thus far, found common ground in negotiating contracts, but if demands get harder on Brazil, analysts say, it may move more quickly to explore its own energy alternatives. "Nationalist policies are only sustainable when prime materials are high, and as long as there are materials to export," says Mr. Pacheco.

Carlos Arze, an energy specialist at the Center for Labor and Agricultural Development in La Paz, says that Bolivia has taken a path that is economically and politically pragmatic. But the risk of a backfire exists if the central government moves down a more radical path driven by popular demands. "People want to see results," Mr. Arze says. They want resource revenue to improve their quality of life. "As of yet, [the government] hasn't been able to advance on that."

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