[I was hoping someone would give you a well informed reply. Since no one has, you will have to settle for me:-) ]
1. Overview: It is still very early in a conflict that may last quite a while. The confrontation has conflicts at several levels:
- consumer interests vs petroleum company interests vs "national development" interests;
- conflicts in the new international pecking order (Bolivia underneath Brazil, underneath Europe, underneath the US);
- complicated domestic political conflicts (within Bolivia, Brazil, Spain, etc) that are rooted in class, ethnic and regional issues.
Although each case is unique I think LBOers may find it interesting to see in the Bolivia case examples that illustrate the new political terrain that is emerging under neo-liberalism. There may be insights to alliances and weaknesses that will relevant to many other international struggles.
2. Lulu (Doug's question): Even IF the path of negotiation is eventually chosen (we won't really know for months) then assessing the outcome, and Lulu's role, will depend on looking closely at the final details. Right now we are seeing only the symbolic political statements and a few opening ploys in the negotiations.
One expects Lulu to start off by sounding "reasonable" in the headlines -- at this point he should hope to find a negotiated solution (one that limits the pain to Brazil's consumers even if Petrobras Brazil's assets\profits are somewhat hurt). He can then show that his liberal "smart" and "understanding" approach works better than the heavy-handed tactics that his domestic opposition would have used in the first instance. BUT, Lulu has already shown a few "sticks": below the headlines he also said he would defend the existing contract and that "Brazil has rights too" (see below for what this alludes to). IMO, one can not yet say where Lula will ultimately position himself in the triangle between Bolivia, Brazilian consumers and Petrobras.
3. Evo Morales has 3 categories of goals. They affect the key foreign players in different ways and they strengthen him domestically with different groups over different time frames.
a. Brazil and Argentina's companies pay Bolivia a fraction of the price that U.S. and European companies pay for gas. The difference is split between foreign consumers (companies and individuals in Brazil and Argentina) and the foreign petroleum companies (mostly from Brazil, Spain and France). The privatization of the mid 1990's gave Bolivia only 18% of the revenue from the large gas fields (!!). Last year, under pressure from the street, the previous government raised the percentage in a complex formula that they claim amounted to 50%. It is not clear if and how this was implemented. Morales is demanding an 82% share.
But even with an increase there will not be huge amounts for national development - even adjusted for Bolivia's much smaller population the gas brings in perhaps a quarter of Venezuela's oil. Still, simply raising the retention share (which was fixed by the basic contract) would give Morales both a political victory and provide significant financing for a public expenditure program that could help him reach out beyond his relatively narrow base. He may need to do this quickly.
[MAS' core is among Aymara speakers and the coco growers in the Chapare district of Chabamba Province and even his supporters did not expect the outright victory in December. The opposition controls the Senate chamber, 6 of 9 regional Departments, all the mainstream media, much of the economy, much of the judiciary, etc. The movement is relatively untested in government and has important internal divisions (political and social). Morales recently greatly scaled back plans to increase the minimum wage, has postponed land reform measures and is receiving more pressure and criticism from the central unions, the miners and the left.]
b. But for Morales' political base re-gaining ownership of the gas may be an even more cherished political goal. His movement emerges from the "Gas Wars" and reversing the heavily contested privatization of the gas was one of two key campaign promises (major constitutional reform was the other and will be even more contested by the opposition). The Presidential decree says that 51% ownership will have to be sold to the state owned gas company YPFB (the source of financing is not clear).
But taking back ownership may put Morales in even greater conflict with the foreign petroleum companies and their international supporters than the price rise. And the financial benefit for Bolivia is only long term - in fact payments to the foreign companies may even be a large short term financial drain. In addition, the previous neo-liberal governments dismantled the national gas company to nearly a paper shell so that the management capacity must now be created from scratch in a country that has limited human resources.
c. A third goal for Morales is to expand Bolivia's capacity to process hydrocarbon's. A processing plant for ethane, methalene and propane is high on his list and Chavez has offered some financing (the amount was not stated and nothing is definite). Chavez also has his own pet project that may compete with Bolivia: a long pipeline to distribute Venezuelan gas to Brazil and Argentina and he has sought ways to make this amenable to Paraguay and Bolivia with feeder lines and hints of concessionary prices.
Gas processing plants would be a valuable "sweetener" for Morales which might permit him to give up a bit more on the price and ownership issues. This helps gives Chavez a place at the table in the discussions with Brazil and Argentina (see also below).
4. Forces outside Bolivia Morales confronts two separate but overlapping categories of immediate external opposition to his move. The price rise affects consumers and hence the governments of Brazil and Argentina (can the petroleum companies pass on all the increase or do they also face some loss in profits?). On the other hand, the forced sale of assets may not affect consumers - just the foreign petroleum companies. U.S. companies are largely not directly involved; 80% of the gas fields are owned by 3 companies: Petrobras (Brazil), Repsol (Spain) and Total (France). BG and BP (UK) are also present.
a) Initial *postures* have ranged from Petrobras (confrontational) to the Brazilian and Spanish governments (calling for negotiations but also threatening). The contracts call for the settlement of disputes in the courts...in New York (!). For example:
"Earlier, Finance Minister Guido Mantega [of Brazil] told the Estado news agency that Brazil could seek arbitration in a New York court in the event of "exorbitant price hikes" for Bolivian natural gas." http://www.businessweek.com/ap/financialnews/D8HCGL1GD.htm?campaign_id=apn_home_down&chan=db
b) There is also the possibility of disputation in the Bolivian courts. Morales, lacking control of the Senate, issued these measures through Presidential decree rather than by Parliamentary law.
c) One dog (really a pack?) has not barked - at least yet. The World Bank has said nothing (contrast this with its tough activist role in Ecuador) and the U.S. has been restrained. Clearly, the nationality of the foreign companies permits the Bush administration and Wolfowitz to play their hand more slowly (and perhaps appreciate the possibility of Lulu, Chirac and Zapatero asking them to play a tough international role).
d) The IMF has also not spoken and its situation may illustrate the cross current of interests that must be sorted out in the coming weeks. The head of the IMF is Spain's former finance minister from the conservative party and that party refused to even meet with Morales when he visited Madrid.
But the head of the IMF is also a close friend of the *former* head of Repsol who was ousted and is being blamed by the current leadership for serious problems (the current leadership was installed by Catalan banking interests regionalist interests who are not friends of the conservative party). The Spanish company Repsol (created from the merger and privatization of Spain's and Argentina's national oil companies) has a big stake in this dispute and an even bigger stake in a dispute with Argentina. Blaming these disputes, Repsol has reversed its estimates of its "proven reserves" which has triggered an SEC investigation (2 years ago Shell did this, leading to scandal and crisis).
e) Chavez' role is strategic and worth noting. In previous cases (such as Ecuador recently), the IMF/WB/Commercial Banks could readily trigger financial crises (citing violation of "conditionality" clauses in loan agreements) thus forcing weak governments to collapse at no risk to themselves. The apparent willingness of Chavez to back Morales limits that threat.
Paul