Latin America demands more for its oil and gas

Gas-rich countries like Bolivia are rolling out plans to nationalize energy reserves.

from the April 10, 2007 edition

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"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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