Bolivia"s Economy
Bolivia has South America's second largest natural gas reserves. President Evo Morales' was elected by promising to return ownership of these natural resources to the people.
In 2008, Morales presented a national constitutional referendum to redistribute wealth from the gas-producing regions of the country to the poorer indigenous regions. This is in addition to using gas revenues for national projects and universal old age pensions.
He has also allowed increased coca growing among local farmers.
As a result, the governors of the eastern gas-producing states have stirred up protests resulting in 30 deaths. The Union of South American States (Unasur) met to intervene in support of Morales.
Morales expelled America's ambassador, whom he accused of supporting the governors. In return, the U.S. threatened to declare Bolivia non-compliant in the war on drugs, ending U.S. anti-drug aid. It threatened to exclude Bolivia from the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which provides duty-free access to the U.S. market for hundreds of Bolivian companies. This would destroy hundreds of jobs.
Morales ordered the 20 foreign oil and gas firms who operate in Bolivia to send production to a state company for processing. This means that these companies could wind up with contracts that pay them to operate the fields, instead of sharing in the profit, as they do now.The resistance by the gas company governors and the U.S.
is to be expected, but will not stop the trend.
The most interesting effect is the power struggle within Unasur between Brazil’s president, Luiz Inácio Lula da Silva, and Venezuela’s Hugo Chávez, who offered use military aid if there is a coup against Mr Morales. Most members agreed with Lula's calmer strategy to ease the conflict. Over the past several years, more Latin Americans are siding with Lula's moderate approach to economic success than Chavez' extreme polarization. Hopefully, Morales will follow Lula's lead, as well. (Source: The Economist, Mediators Step In, September 17, 2008)
In 2008, Morales presented a national constitutional referendum to redistribute wealth from the gas-producing regions of the country to the poorer indigenous regions. This is in addition to using gas revenues for national projects and universal old age pensions.
He has also allowed increased coca growing among local farmers.
As a result, the governors of the eastern gas-producing states have stirred up protests resulting in 30 deaths. The Union of South American States (Unasur) met to intervene in support of Morales.
Morales expelled America's ambassador, whom he accused of supporting the governors. In return, the U.S. threatened to declare Bolivia non-compliant in the war on drugs, ending U.S. anti-drug aid. It threatened to exclude Bolivia from the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which provides duty-free access to the U.S. market for hundreds of Bolivian companies. This would destroy hundreds of jobs.
Morales ordered the 20 foreign oil and gas firms who operate in Bolivia to send production to a state company for processing. This means that these companies could wind up with contracts that pay them to operate the fields, instead of sharing in the profit, as they do now.The resistance by the gas company governors and the U.S.
is to be expected, but will not stop the trend.
The most interesting effect is the power struggle within Unasur between Brazil’s president, Luiz Inácio Lula da Silva, and Venezuela’s Hugo Chávez, who offered use military aid if there is a coup against Mr Morales. Most members agreed with Lula's calmer strategy to ease the conflict. Over the past several years, more Latin Americans are siding with Lula's moderate approach to economic success than Chavez' extreme polarization. Hopefully, Morales will follow Lula's lead, as well. (Source: The Economist, Mediators Step In, September 17, 2008)
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