1. On May 1, 2005, the Bolivian Senate approved legislation, already approved in the Bolivian House of Representatives, instituting an effective 50% combined tax and royalty rate on gas and oil, with no credit for this tax against income taxes. Ten days later, after Mesa vetoed the energy bill, the struggle left the parliamentary arena and returned to the streets and highways of Bolivia.
Parliaments, created first as the instruments of civil war, as the instruments for the ascendancy of bourgeois property, are endured by the bourgeoisie only to the extent that they remain true to their origins, true to that form of property, by becoming their opposites; to the degree and to that degree only that parliaments functions as substitutes for civil war. As long as legislation functions to preserve private property, legislatures are tolerated. When and if legislation violates that condition, becomes a contradiction reflected back unto itself, it means parliament, and parliamentary maneuvering has become obsolete. History, sooner or later, accepts no substitutes. In Bolivia, that sooner or later is here and now.
2. Mesa vetoed the energy law and triggered his own downfall. Eleven months earlier, Mesa had initiated a national referendum on how Bolivia should exploit its natural gas resources. The results of that referendum overwhelmingly supported Mesa's stated intentions to raise royalties on production to the 50% mark, and to export gas through Peru rather than Chile.
In October 2004, Mesa sent the Bolivian Congress a new energy bill that re-nationalized Bolivia's hydrocarbon reserves, increased royalty rates, and returned regulatory control over production and export to the government. The international energy companies protested and threatened court action if the bill were enacted. The energy companies claimed the law would violate the terms of 40 year contracts the Bolivian government had signed in 1996.
International energy companies, through the good offices of the US ambassador, then entered into intensive discussions with Mesa's government where, once again, Mesa showed his ability to listen and compromise. When Mesa vetoed the legislation of May 2005, vetoing essentially the legislation he proposed in the national referendum, he cited the possible illegality of the law in nullifying the 40 year contracts.
The workers and poor of Bolivia, with a life expectancy of about 60 years, in a country with a poverty rate of 66%, and an infant mortality rate of 53 per 1000 live births, didn't want to kill time for 40 years, especially when time was killing them. By May 23, the streets of El Alto were completely in the hands of protestors. In the first week of June, three oil fields belonging to the Spanish company Repsol YPF were occupied by workers and poor. Repsol YPF has rights to 35% of Bolivia's natural gas reserves. The Chaco fields of British Petroleum were also occupied.
Proving once again that he could listen and compromise, Mesa announced, "I have only hours left as president." He was right about that.
3. The origin of the 40 year contracts was in Bolivia's Capitalization Law of 1994. The capitalization act was specifically aimed at Bolivia's major public companies: ENDE (electricity), LAB (the national airline), ENFE (railways), ENAF (smelter) , ENTEL (telecommunications), and YPFB (petroleum and natural gas). The program awarded, by international tendering of shares, 50% of the company to investors. The other 50% was designated as a national reserve "belonging" to the Bolivian people, but only through private pension funds handled by international trustees. Sound familiar? Marx, 150 years, ago advised those trying to understand the future of India to look to Britain. Today that advice is just the reverse. For those trying to understand the future of international capitalism, the future for living standards, wages, and pensions; for those trying to understand that future has already begun, the advice is to look to Bolivia, Indias, Sri Lanka, Senegal, as capitalism seeks ways to reduce living standards, to "third world" the working class everywhere.
Administrative control of the privatized company would rest solely with the private investor. This control was guaranteed by the law, by the execution of the capital contracts of purchase, and through administrative contracts for management services. The private investors maintained this control for a minimum of 5 years, or until their investment had been recuperated, or for the terms fixed in the contracts themselves. Thus 5 would get you 40, or rather 50 got you 100 for 40. Nice math, if you can get.
And the bourgeoisie got it because they tried. YPFB was split into two "upstream" (extraction and production) companies, a transport company, a refining company, and several oil and gas service companies. BP Amoco and Repsol YPF purchased 50% of the two upstream companies. Transredes, a joint venture of Enron/Royal Dutch/Shell Game, bought the natural gas transport company.
Competing against the EU/US energy majors, Argentina's YPF, Pluspetrol, and Brazil's Petrobras pushed investment in natural gas reserves and pipeline construction.
Foreign direct investment following the 1994 capitalization law soared, tripling between 1994 and 1995, doubling again between 1996 and 1998, reaching $957 million. While FDI in the energy sector peaked in 1998, total FDI peaked in 1999 at $1.017 billion, only to decline 27% in 2000.
Proven reserves of oil and gas followed the investment boom, with proven gas reserves exceeding 50 trillion cubic feet, and oil reserves tripling to 440.5 million boe.
The overinvestment in petroleum production that led to the price collapse of 1998 was reflected in a decline in the number of exploratory leases bid upon by, and awarded to, the international energy companies. While 16 blocks were awarded for exploration in 1997, only 2 were awarded in 2000. The awarded blocks provided reserves far exceeding original estimates, with proven reserves of natural gas in 2000 exceeding 1997 estimates sevenfold.
Despite this increase in reserves, annual gas production was essentially unchanged between 1995 and 2000 as infrastructure and markets were inadequate to both reserves and production capacity. Half the produced gas was being reinjected or flared off.
4. In keeping with their inability and disdain for the tasks of actually governing Bolivian society, and with international capital's love of concession, enclave, capitalism, the criollos eastern provinces bang the drum for autonomy, the autonomy of the propertyholders of the gas and oil leases, although the east is not the area of the greatest reserves. The overwhelming portion of the growth in reserves is in the Tarija region of the south. But fragmentation is the goal, and the east is where the criollos and the energy majors formed their first alliances.
Bolivia, the class struggle, is the critical manifestations of uneven and combined development-- a property organization incapable of supporting a domestic market, of "emancipating" enough labor to develop the society, coupled with the highly advanced capital intensive petroleum industry where the fixed expenditures wind up reducing the rate of return on investment, thus further depressing economic growth, and inhibiting the reproduction of capital itself. Expropriation of the expropriators is the only method for the resolution of this contradiction.
If the struggle for control of hydrocarbon reserves and production was precipitated by the capitalization law of 1994, that law itself was pre-figured in the IMF proposed, national bourgeoisie imposed, dismantling and destruction of the tin mining industry.
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