Bolivia: Nationalization On Its Knees
by Andrés Soliz Rada, Rebelión, 1st April 2007
Sometimes the efforts of oppressed peoples to liberate themselves from imperial subjugation are confronted by direct,
brutal violence like that used by the CIA to overthrow Jacobo Arbenz in Guatemala in 1954 and Salvador Allende in Chile
in 1973 or else by innoculating the virus of paralysis, disorientation and demoralization into the lifeblood of the
movement for change as happened in Bolivia with the Revolution of 1952. The 1952 Revolution carried on calling itself
revolutionary even after the US managed to abort the nationalization of the mines by blocking the installation of metal
foundries, taking control of oil via the Davenport Code (1) and centralizing all official information in its embassy in
La Paz .
This latter way marked the third oil nationalization (2)of May 1st 2006. The oil companies appeared to obey the measure
and even "accepted" the framework contract which converted them into service providers in such a way that YPFB(3)
recovered ownership, possession and absolute control of underground resources. This time around, the emasculating virus
was innoculated via the "innocent" Annexe F, by means of which the Operating Contracts were changed into Shared
Production Contracts. Under the Operating Contracts the oil companies would pay to carry out exploration and
exploitation activities in the name of YPFB using their own means, on their own account, at their own risk.
Under Shared Production the oil companies recover the right to include the value of their participation in oil
transactions, including the gas reserves associated with export markets over which they have ownership rights, which
they register first in their own accounts and later in the international stock markets.
With this antecedent, Petrobras (4) announced on March 31st this year that it was signing Shared Production Contracts in
La Paz which allowed it to register the value of the reserves in the stock markets. As a result, the May 1st
nationalization turned into a hollow shell, with the government having to limit itself to saying that it had obtained
greater income via the sale of larger volumes of oil and gas.
It proposed, without success, that the formulas of Annexe F be made known to the Senate in closed session, that is to
say behind the backs of the citizenry. It paralysed the trials for crimes of smuggling, tax evasion and fraud committed
by the oil companies. It went on to show the new exports to Argentina as an end in itself and not as a necessary evil
with the aim of using those resources for nation building. YPFB will not control the production chain and will not be
able to promote the industrialization of hydrocarbons.
Thanks to this, Bolivia now has huge difficulties obliging the oil companies to supply the domestic market at lower
prices than international prices. Via the construction of huge gas pipelines it will continue exporting raw materials
destined for industry in Argentina and Brazil, so the interior regions of the country will continue to lack energy
resources. Nor will it be able, through the guarantee of the value of the reserves, registered in favour of the foreign
oil companies, to obtain the necessary loans to promote projects capable of transforming our economy.
Could Bolivia have followed another route and faced down the monstrous power of the oil companies backed up by imperial
powers like the US, Britain, France and Spain, and too by international financial institutions like the World Bank, the
Inter-American Development Bank and the Andean Development Corporation as well as the hundreds of non-governmental
organizations that have got themselves key positions within Evo Morales MAS (5)? Why demand more radical behaviour of
the first President to call himself indigenous than that demanded of Kirchner or Lula who, in the end, lead countries
far better able to resist the New World Order led by that mess of fanaticism and dementia that is George Bush? Could he
have chosen a course making national interest and dignity, set down in the Nationalization Decree, prevail with only the
support of the Cuban government or the government of Chavez, one of whose economic bases is the consumption of
Venezuelan oil by North America?
Possibly, the answer might be negative. Evo had few choices to do anything different than what he did with the oil
contracts. On the other hand, he lost the chance to do something profoundly revolutionary. That consisted in telling the
country the truth which would have strengthened his moral leadership of the excluded sectors of Latin America for whom
he represents hope.
By not doing so he offers a desolating spectacle in which the oil multinationals, neoliberal legislators who supported
Hugo Banzer Suarez and Gonzalo Sanchez de Lozada (5), along with the leaders of MAS, call on the people to support Oil
Contracts characterized by the sinister Annexe F and which, in the fundamentals, help maintain Bolivia's submission to
the centres of world power.
1. The Davenport Code was the name applied to legislation promulgated in 1956 offering concessionary terms to foreign
(mostly US) oil companies. In 1969 President Alfredo Ovando Candia revoked the Davenport Code legislation. when his
government nationalized Gulf Oil.
2. Shortly after Yacimientos Petrolíferos Fiscales Bolivianos was founded in 1936, General David Toro's government
nationalized Standard Oil's holdings in Bolivia. The second nationalization was that of President Alfredo Ovando Candia
3. Yacimientos Petrolíferos Fiscales Bolivianos - the State hydrocarbons company.
4. Petrobras although nominally Brazil's State oil company is owned mainly by foreign investors.
5. MAS - Movement Towards Socialism - is Evo Morales' political party.
6. Hugo Banzer Suarez, former Bolivian dictator (1971 to 1978) and also elected President (1997 to 2001). Gonzalo
Sanchez de Losada was president twice from 1993 to 1997 and from 2002 until he was forced to flee the country after the
2003 uprisings against his oil and gas policies in favour of foreign multinational oil companies in which many dozens of
protestors were killed by security forces.
Translation copyleft by Tortilla con Sal