Archive for June, 2005|Monthly archive page

Like Oil and Water, Part 1

1. In January 2005, Carlos Mesa, the soon-to-be ex-President of Bolivia, backtracked, partially, on the fuel price increases that had triggered mass protests and calls for his resignation, sooner rather than later. Perfect president of and for the class that can do things only partially and always backward, Mesa addressed the nation and said the he was “capable of listening and compromising.”

The Bolivian people however weren’t. Blockades continued. Demonstrations against privatization of resources and basic utilities gained strength.

The residents of El Alto, the city that overlooks La Paz had taken to the streets, had taken the streets, in order to drive out a French company which, after having secured private control of the city’s water supply, failed to deliver the water. La Mesa capitulated to El Alto and cancelled the contract.

The table was set and Mesa was on the way down. The commanding heights of the society were the city streets, the village roads, and those belonged to the people.

Protests and demonstrations ebbed only to flow again. Since January the country has been locked in close quarters class combat.

Actions against water privatization and fuel price increases became demands for the expulsion of international oil companies and for the nationalization of the entire energy sector.

In March, Mesa threatened/promised to resign when the Bolivian Congress was reluctant to consider his proposal for a new tax rate on oil and gas extraction. With the full approval of Washington, Paris, Madrid, and Brasilia, Mesa offered a 32% tax on gas extraction, a rate that could be both reduced and deducted from income taxes.

Evo Morales, leader of the Movement for Socialism, MAS, the major opposition force both in and out of Congress with extensive ties to those blockading highways and streets, introduced a flat 50% royalty assessment against the international companies, which will prove that the difference between Mesa and Morales, in the long run, is one of percentage and not one of principle or principal.

The Congress agreed to review Mesa’s plan, thus delaying the inevitable, Mesa’s resignation. But first the lower house of the Bolivian Congress adopted a tax/royalty structure equal to the 50% non-deductible assessment, and the senate soon followed.

The international petroleum companies, led by Repsol and Petrobras, weighed in with threats of disinvestment if the 50% bill was enacted. Said the chief of Petrobras’ Bolivian operations: “Don’t take this as an irrational threat. The money is there, but if it is not going to be profitable, we will not invest it.” Apparently, the ability to listen and compromise only goes so far, 50%, halfsies, being far too irrational a compromise.

But here’s the joke, international investment in Bolivia’s energy sector had peaked in 1998 at $605 million. In 2003, the amount invested had declined to $281 million. Overall foreign direct investment declined 45% between 2002 and 2003 to $357 million. In 2004, investment in the energy sector declined another 16% to $235 million.

So while the bourgeoisie, local and international, warned of shortfalls, disinvestment, declining production, in reality it is overproduction that has driven the workers, the poor, the landless, the indigenous peoples into the streets and across the highways to block yet another effort by capital to extract value through the extension and expansion of poverty. Profit, uncompromised profit, is the eternal and ultimate rationality of capitalism. Poverty is the once and future product, as the people of Bolivia know, of enlightenment.

S. Artesian
June 12, 2005

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