Bolivia Bruno

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Information about Bolivia Bruno

Published on January 28, 2008

Author: Biaggia


Bolivia – The Aftermath of Colonization:  Bolivia – The Aftermath of Colonization ECE 510 – EDGE Bruno Zbinden Slide2:  BACKGROUND Currently, Bolivia is the second poorest country in South America, with a GPD pf $25.6 billion [compared to $12.6 trillion for U.S.A.] and a GDP per capita of $2,817 [compared to $41,399 for U.S.A] INDEPENDENCE The Independence from Spanish rule movement in South America begun in 1806 in Sucre, Bolivia. Simon Bolivar [born into a wealthy family in Caracas, Venezuela] became on of the most prominent figures in this movement, leading the independence movement in Venezuela, Colombia, Ecuador, Peru and Bolivia (1825). He wrote the Bolivian Constitution, and was a believer of the models of Limited Government, Separation of Powers, Freedom of Religion, Property Rights, and the Rule of Law [Government authority is exercised only in accordance with written and publicly disclosed laws] Inspired by the American-Revolution, Bolivar’s goal was to create a federation between all of the newly liberated republics, with a government set-up to recognize and uphold individual’s rights. Slide3:  BOLIVARIAN REVOLUTION In recent years, the idealism of Simon Bolivar has regained momentum in countries of South America, under the name of The Bolivarian Revolution based on the ideology by the name of Bolivarianism. The most prominent advocate and attributed with initiating it is Venezuela’s President Hugo Chavez. One of the main ideas of Bolivarianism is to promote the unification of Latin American countries. However, Hugo Chavez’ Bolivarian Revolution has been seen as contradictory to Simon Bolivar’s neo-liberal ideologies, and therefore has been classified as a neo-Marxist political movement, sometimes also called Chavism. The central points of Chavez’ Bolivarian Revolution are: Venezuelan economic and political sovereignty. Economically self-sufficient (in food, consumer durables, etc.) Equitable distribution of Venezuela’s vast oil reserves. Eliminating corruption. One of the movements that Chaves is promoting is the mutual support amongst countries holding key reserves of hydrocarbon resources to stop the dependency on international investors for the export of these resources. Oil is the basis of Chavez’ power in this revolution, as the world’s fifth-larges crude oil exporter. Selling 60% of its output to the USA and accounting for 15% the USA’s petroleum imports. Slide4:  BOLIVARIAN REVOLUTION (CONTINUED) If Chavez’s Bolivarian Revolution is to be successful, Venezuela must keep pumping enough oil to finance it. The country has the largest proven oil reserves in the Western hemisphere (78 million barrels) and the largest in the world (300 million barrels) if the crude in the Orinoco tar belt is included. Venezuela’s advantage over other countries is that it also owns significant refining and distribution assets through Houston-based CITGO. Profits from energy-based resources are estimated at US$6.5 billion [2004], with $5 billion being invested in further exploration and development with the goal of bringing production from the current 3.2 million barrels per day (MBPD) to 4.9 (MBPD) by 2010. It is estimated that from these profits, Chaves is diverting $4 billion a year to finance the Bolivarian Revolution. Leading to a possible investment shortfall that can only be made up by foreign investors. Currently Venezuela is moving towards diversification of investment sources for its oil industry, signing agreements with Beijing, Brasilia and negotiating with New Delhi. Chavez’ plan is to deal government-to-government rather than with private firms and to make Venezuela less dependent on exports to the U.S. and therefore set an example to other Latin American countries Slide5:  BOLIVIAN GAS WAR Bolivia has the second largest supply of natural gas in South America (After Venezuela). It is estimated that Bolivian gas reserves are between 48 and 52 Trillion Cubic-Feet, with 26.7 TCF proven. Beginning in 1993, under the neo-liberal government of Gonzalo Sanchez de Lozada (“Goni”, educated in the U.S.A.), contracts were awarded to 26 foreign countries for the exploitation and export of natural gas from Bolivia. These awards were done without the approval of congress as required by the Constitution. In 1994 a private contract was signed to build the Bolivia-Brazil gas pipe, which was completed in 1999 at a cost of US$2.2 billion. Under this contract, natural gas was sold to Brazil at an estimated US$3.15 to US$3.60 per thousand BTU, as compared to the market price in the USA between $5.85 and $7.90 (estimated in May of 2006) and at a rate of 27 million cubic meters per day. In 1996 the state-owned gas company (YPFB) was privatized to a consortium comprised of British (BP), Spanish (YPF), and Brazil’s Petrobras companies. Gonzalo Sanchez was declared winner of the 2002 elections by congress, with only 22% of the vote. During these elections Evo Morales comes in second place. He became a prominent political figure in what is to follow in the next two years. Slide6:  BOLIVIAN GAS WAR (CONTINUED) In early 2003 a plan to construct a pipeline to the Pacific Ocean, in order to export raw natural gas to Mexico and the US (California) was proposed. This was the beginning of a series of protests and revolts organized and led by Evo Morales. These protests were responded to with violent and deadly force by the military, resulting in the death of several protestors and many more injured. These protests continued for months and increased in intensity in September of 2003. The unrest was spearheaded by the indigenous majority, with Evo Morales as its leader, who accused Gonzalo Sanchez of pandering the US government’s “War on Drugs”, and blamed him for failing to improve the living standard of the poor in Bolivia. In October 2003, the government imposed martial law, after protestors proceeded to block key access routes to the capital, causing severe fuel and food shortages. Sixteen people were shot and killed, and several dozen wounded when a caravan of oil trucks escorted by police and soldiers deploying tanks and heavy-caliber machine guns tried to breach a barricade of protestors. Slide7:  BOLIVIAN GAS WAR(CONTINUED) In October 18, 2003 President Sanchez de Lozada was forced to resign and flee the country to Washington D.C. where he currently resides. In May 2005, congress passed a referendum increasing the taxes on gas exports from 18% to 50%, however the former vice-president, now in the role of president, failed to sign or veto the law and the Senate president was required to sign the referendum into law. The following month the President, Carlos Mesa, was forced to resign, and the Supreme Court Justice was promoted to serve as interim President, until new elections were held. Early elections were held in December of 2005, and Evo Morales won with an undisputed 54% of the vote, thus becoming the first indigenous head of state in Latin America for over two centuries. Slide8:  EVO MORALES – DOMESTIC POLICY The platform under which Morales run for presidency included: Nationalization of strategic industries. Price reduction and a price freeze on household goods. Provision of basic services for all. Increased taxes for the rich. Redistribution of land to those who work it. End to neo-liberal economic policies. Opposition to a ‘flexible’ work force (part-time, contract, short-term). In March 2006, Morales announced an increase in the minimum wage by 50%. In May 2006, Morales signed a decree stating that all natural reserves were to be nationalized “..the state recovers ownership, possession and total and absolute control of hydrocarbons” He has also opened an assembly to write a new constitution for the Bolivian people with equal rights for the indigenous population. Another political aspect of Morales is his support for coca leaf growers, as this leaf has been used by Andean people for centuries as a dietary supplement, long before it was used for cocaine. The U.S. led “Plan Dignidad”, which seeks to eradicate the coca leaf completely is seen by the indigenous population as a direct attack on their livelihood and way of life. Morales argues that the cocaine problem should be solved at the consumption side and not by eradicating the coca plantations. Slide9:  Instead, Morales first stop was Cuba, where he signed a cooperation agreement between the two countries. The next stop was Venezuela, where Venezuelan President Hugo Chavez offered 150,000 barrels of diesel per month to substitute current imports made from other countries. He met with the President of the People’s Republic of China Hu Janito and Chinese Minister of Commerce Bo Xilai, where Morales invited entrepreneurs and the government of China to invest in projects of construction of gas refineries in Bolivia. Finally Morales met with Brazilian President Lula da Silva, and they both agreed to work together in a program of cooperation to combat poverty in both countries. EVO MORALES – INTERNATIONAL POLICY Following his election, Morales undertook an international tour described by Latin American media as exceptional. He visited several countries in search of political and economic support for his agenda and for the transformation of Bolivia. This tour is said to have constituted a break with decades of tradition in which the first international destination visited by an elected president in Bolivia was the U.S. Slide10:  NATIONALIZATION OF GAS RESERVES In May of 2006, he signed into law that all Bolivian natural gas reserves were to be nationalized, and that 76 contracts signed by foreign firms were to be renegotiated. This step is expected to increase the national revenue from energy sources to $780 million in 2007 (a six fold increase from the 2002 revenue) Unlike Venezuela, Bolivia lacks the technological capacity to process and refine their own natural resources, even for their own use. This handicap represents a huge loss of leverage in the pressure that Bolivia can exert with its natural resources. In October 20, 2006 Argentina’s leftist president Nestor Kirchner signed a deal to import $17billion of Bolivia’s natural gas over the next 20 years. This is a deal portrayed as part of a drive toward Latin American solidarity. Oct. 30th: Bolivian government and foreign oil firms signed last-minute contracts to comply with the nationalization of the hydrocarbon resources in the country. The contracts are based on the size of the field being exploded. For ‘mega-fields’ the companies will pay 50% royalty and tax, and from the remaining 50% companies will have to meet production and investment costs, and the remainder profit will be divided between the foreign firms and YPFB, therefore including this payment to YPFB, Bolivia’s take on the ‘mega-field’ will be about 80% Slide11:  COMPANIES AFFECTED: PETROBRAS (Petroleo Brasileiro S.A.) Partially owned by Brazilian government. About half of the gas consumed by Brazil is supplied by Bolivia. Brazil is looking at buying more gas from Peru to reduce Bolivia’s share of their market, but this is dependent on more reserves being found in Peru’s giant Camisea Field. DEVON ENERGY CORPORATION Headquartered in Oklahoma City, USA. Fortune 500 company. One of the largest processors of natural gas and natural gas liquids in North America. Produces around 2.3 billion cubic feet of natural gas each day. REPSOL YPF SA Spain’s largest oil company (private company). Operates in Latin America, the Middle East, and North Africa. Firm owns YPF, Argentina’s #1 oil company. One of the world’s ten largest oil enterprises. OTHER COMPANIES Currently Bolivia is trying to find other investors for the export of its natural gas. PDVSA, a Venezuelan state energy company. GAZPROM, a Russian state energy company. Slide12:  CURRENT POLITICAL STATE IN SOUTH AMERICA: With the dawn of the new millennium, a significant shift in the political picture of South America is evident: The trend reflects both disillusionment with the neo-liberal economic model and the continued rejection of policies which strengthen or support the use of force to solve problems. Some of these countries are: Venezuela: President Hugo Chavez was re-elected to a third term last Sunday with an overwhelming 60% of the vote. He is by far the most outspoken political figure in South America for an anti-U.S. social revolution. Brazil: President Lula da Silva was re-elected to a second term in October of 2006, his politics are considered left-wing, but he has moved closer to social democracy. Nicaragua: Left-leaning Daniel Ortega was elected a couple of weeks ago. Argentina: President Nestor Kirchner is considered to be left-leaning. Ecuador: President Rafael Correa, a leftist nationalist who is friendly with Venezuela’s President, defeated banana tycoon Alvaro Noboa in a runoff election. Correa received a Ph.D. in economics from the University of Illinois at Urbana-Champaign. Chile: The country’s first female president Veronica Bachelet, a moderate socialist, won the 2006 elections with a runoff, beating billionaire businessman and former Senator Sebastian Pinera. Slide13:  CONCLUSION Bolivia is a country that has suffered from political turmoil and corruption since its birth from colonization. As direct descendents of the Inca civilization, the indigenous population has grown frustrated and restless during the past two centuries, being unrepresented in the political screen, their voices and opinions have been drowned along with their culture. Two realities have become evident in the last decade for Bolivia. First, its role in the international hydrocarbons arena is much bigger than originally thought. And second, the neo-liberal economic policies that privatized these national resources to outside investors have been proven to be wrong. From this struggle has emerged a new leader that for the indigenous population has the promise of a voice, and for the country as a whole, it holds the promise of a new beginning based on its own resources. The international polices of Evo Morales fall in line with an emerging shift in political views in the entire continent, where countries are beginning to align and support each other towards a common goal of becoming unified and self-sufficient. Ironically, these are the same goals that lined the revolutionary picture of the continent more than two-hundred years ago.

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