The Bolivian gas conflict was a social confrontation in Bolivia centering on the exploitation of the country's vast natural gas reserves. The expression can be extended to refer to the general conflict in Bolivia over the exploitation of gas resources, thus including the 2005 protests and the election of Evo Morales as president. Prior to these protests, Bolivia had seen a series of similar earlier protests, during the Cochabamba protests of 2000, which were against the privatization of the municipal water supply.
Overview
The conflict had its roots in grievances over the government's economic policies concerning natural gas, as well as coca eradication policies, corruption and violent military responses against strikes. On a larger scale, it can be traced to Bolivia's colonization since the 15th century and the subsequent looting of its natural resources (e.g. the mines of Potosí).
The "Bolivian gas war" thus came to a head in October 2003, leading to the resignation of President Gonzalo Sánchez de Lozada (aka "Goni"). Strikes and road blocks mounted by indigenous and labour groups (including the COB trade union) brought the country to a standstill. Violent suppression by the Bolivian armed forces left some 60 people dead in October 2003, mostly inhabitants of El Alto, located on the Altiplano above of the capital city La Paz.
The governing coalition disintegrated forcing Goni to resign and leave the country on October 18, 2003. He was succeeded by the vice president, Carlos Mesa, who put the gas issue to a referendum on July 18, 2004. In May 2005, under duress from protesters, the Bolivian congress enacted a new hydrocarbons law, increasing the state's royalties from natural gas exploitation. However, protesters, who included Evo Morales and Felipe Quispe, demanded full nationalization of hydrocarbon resources, and the increased participation of Bolivia's indigenous majority, mainly composed of Aymaras and Quechuas, in the political life of the country. On June 6, 2005 Mesa was forced to offer his resignation, as tens of thousands of protesters blockaded La Paz from the rest of the country daily. Morales' election at the end of 2005 was met with enthusiasm by the social movements, since he was, as the leader of left-wing MAS, one of the staunchest opponents to the exportation of the gas without previous industrialization in Bolivia. On May 1, 2006 (which is also Labor Day), President Morales signed a decree stating that all gas reserves were to be nationalized: "the state recovers ownership, possession and total and absolute control" of hydrocarbons. The announcement was met by applause on La Paz's main plaza, where vice President Alvaro Garcia said to the crowd that the government's energy-related revenue will jump US$320 million to US$780 million next year, continuing a trend where revenues have expanded nearly sixfold from 2002.
Background
The second-largest gas reserves of South America
The issue was regarding Bolivia's large natural gas reserves and the prospect for their future sale and use. The Bolivian gas reserves are the second-largest in South America, after Venezuela, and exploration after the privatization of the national oil company YPFB showed that proven natural gas reserves were 600 percent higher than previously known. The cash-poor state-owned company could not afford the exploration costs. These reserves are mainly located in the south-eastern Tarija Department, which contains 85% of gas and petrol reserves. Another 10.6% is located within the department of Santa Cruz and 2.5% in the Cochabamba Department, according to the US Department of Energy. After further exploration between 1996 and 2002 the estimated size of the probable gas reserves was calculated to be 12.5 times larger, passing from 4.24 TCF (trillion cubic feet) to 52.3 TCF. This number has since declined somewhat to 48 × 10
^12 cu ft (1,400 km 3 ) probable reserves. The proven reserves are 26.7 TCF. With the declining importance of tin mines, those reserves accounted for the majority of foreign investment in Bolivia. The price which Bolivia is paid for its natural gas is roughly US$3.25 to Brazil and $US3.18 to Argentina. Other sources state that Brazil pays between US$ 3.15/MMBtu and US$ 3.60/MMBtu (not including US$ 1.50/MMBtu in Petrobras extraction and transportation costs). The price of gas in the US as a whole is between US$ 5.85/MMBtu (May 21, 2006), US$ 7.90/MMBtu (April 2006) & US$6.46/MMtu (June 2006)., although several years ago the price of natural gas spiked at $14 in California due to lack of pipeline capacity to and within California, and also due to electricity outages. While according to Le Monde , Brazil and Argentina pay US$2 per thousand cubic meter of gas, which costs between $12 to $15 in California.In 1994, a contract with Brazil was passed, two years before 1996's privatization of the 70-year-old, state-owned Yacimientos Petroliferos Fiscales de Bolivia (YPFB). The construction of the Bolivia-Brazil gas pipeline cost US$ 2.2 billion.
A consortium called Pacific LNG was formed to exploit the newly discovered reserves. The consortium comprised the British companies BG Group and BP, and Spain's Repsol YPF. Repsol is one of three companies that dominate the gas sector in Bolivia, along with Petrobras and Total. A plan costing US$6 billion was drawn up to build a pipeline to the Pacific coast, where the gas would be processed and liquefied before being shipped to Mexico and the United States (Baja California and California), through a Chilean port, for example Iquique. The 2003 Lozada deal was heavily opposed by Bolivian society, in part because of nationalism (Bolivia still feels resentment after the territorial losses of the War of the Pacific in the late 19th century, which deprived it of the Litoral province and hence of access to the sea).
Government ministers hoped to use the gas profits to bolster the sagging Bolivian economy and claimed the money would be invested exclusively in health and education. Opponents argued that under the current law, the exportation of the gas as a raw material would give Bolivia only 18% of the future profits, or US$40 million to US$70 million per year. They further argued that exporting the gas so cheaply would be the latest case of foreign exploitation of Bolivia's natural resources, starting with its silver and gold from the 17th century. They demanded that a plant be built in Bolivia to process the gas and that domestic consumption had to be met before export. As Le Monde puts it, "two reasons plead for the industrial exploitation of the gas, which the multinational companies now have the capacities of doing. The first is related to the necessity of satisfying the Bolivians' energy needs. The second demonstrates the interest of exporting a more profitable product, rather than selling raw material". According to the French newspaper, only La Paz, El Alto, Sucre, Potosi, Camiri and Santa Cruz are now connected to the gas network; making an interior network which would reach all Bolivians would cost $1.5 billion, notwithstanding a central gas pipeline to link the various regions together. According to Carlos Miranda, an independent expert quoted by Le Monde , the best industrialisation project is the petrochemical complex proposed by the Brazilian Braskem firm, which would create 40 000 direct or indirect jobs and cost $1.4 billion. This figure is equivalent to the amount so far invested by Repsol, Total and Petrobras.
Indigenous communities
Bolivia, like much of Latin America, is a highly class-segregated society, in this case along ethnic lines: European-Indigenous people. European descendants tend to monopolize political and economic power and in fact the republican institutions are drawn along the lines of European schools of thought with little or no adjustment to the indigenous tradition. This makes it much harder for the indigenous to integrate into society and to achieve personal success. Since the late 1990s, the indigenous communities have become radicalized throughout the Andes pressing for political reform in Peru, Ecuador and Bolivia, loosely coordinated in the Pachacuti movement. The Movement Toward Socialism ( MAS ), is perhaps the strongest political expression of this movement in Bolivia, coordinating a wide range of community-based organizations mostly reflecting Aymara political aspirations.
Santa Cruz autonomy movement
The wealthier, eastern departments of Santa Cruz, Beni, Tarija, and Pando have recently been mobilizing in favor of autonomy. Important issues are opposition to the seizure of resources though nationalization, the confiscation of land from local control by outside ethnic groups (mainly the Aymara and Quechua), and a greater share of taxes collected within Santa Cruz to support roads and schools. Community leaders are supported by the Comite Pro Santa Cruz, local co-ops, and by business organizations such as cattle ranchers and farmers. A strike against the new constitution was recently held which was observed in Santa Cruz, Beni, Tarija, and Pando. Tensions have been raised by the cultural and philosophical rift exposed by the push fo
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