Bolivian President Evo Morales sent troops to gas fields on Monday after nationalizing the gas and oil industries. The European Union warned the move could put additional pressure on energy markets. Two policy researchers discuss the reasons behind the decree and Bolivia's future.
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It was a dramatic gesture by South America's newest populist leader. Late yesterday, Bolivia's president, Evo Morales, sent soldiers into his country's natural gas fields and declared that he was nationalizing the gas and oil industries.
PRESIDENT EVO MORALES, Bolivia (through translator):
The property of this oil and natural gas passes from this moment into the hands of the state of Bolivia, under the control of the Bolivian people. This is the solution to the social and economic problems of our country.
Once we have recovered these natural resources, this will generate work; it is the end of the looting of our natural resources by multinational oil companies.
The response came quickly, especially in Europe. Many of the energy firms facing nationalization are either European or Brazilian. A European Union spokesman had this to say.
JOHANNES LAITENBERGER, E.U. Spokesman:
We would have liked to see here a process of prior consultation and discussion on any proposals before their adoption, and we are now analyzing the situation created by this decree.
Under the terms of the decree, some 25 private gas companies have six months to renegotiate their contracts with the Bolivian government or be expelled, and they will be forced to sell at least 51 percent of their holdings to the state.
Bolivia is one of Latin America's poorest nations. Most of Bolivia's 9 million people get by on less than $2 a day. The country sits in the Andes Mountains, landlocked by Peru, Chile, Argentina and Brazil. Bolivia is rich in oil and gas reserves, the second largest in South America after Venezuela.
The fate of Bolivia's energy reserves has been a hot-button issue in the country. It saw two presidents ousted by popular uprisings in three years.
Morales won office in 2005 on promises to improve the situation for the poor by reclaiming the country's natural gas resources. The move by Morales is his latest gesture of solidarity with other Latin leftists, notably Cuba's Fidel Castro and Venezuela's Hugo Chavez. They met last month and vowed to try to reduce U.S. influence in the hemisphere.