After several decades of progress, much of Latin America is suffering a relapse of Castroism. The thugish government of Chavez in Venuzuala is now being followed by that of Evo Morales in Bolivia. Morales represents the worst instincts of Latin populism. He has sent soldiers to seize Bolivia's oil fields, thus appropriating billions of dollars of foreign investments. Well, its their oil you might say. But the dollars that developed the fields came from outside, and it bodes very ill for Bolivia to cut off foreign investment. Bolivia cannot be developed without help, and that help isn't going to come from Castro.
Alvaro Vargas Llosa has an excellent analysis of the situation. Vargas Llosa is one of my new favorite writers. He is the son of the Peruvian novelist Mario Vargas Llosa, who is in fact my favorite living novelist. If you want a rocking good book, read The Storyteller, my favorite Latin American novel.
AVL points out that Bolivia is cutting the economic branch it is sitting on.
His latest brawl with moderate neighbors saw him call Peru's president, "a traitor to indigenous people" for signing a Free Trade Agreement with Washington. Morales did so immediately after Venezuela announced it was abandoning the Andean Community of Nations (a regional trading bloc) because Colombia had signed its own Free Trade Agreement with the U.S. Since Toledo, like Morales, is indigenous, this sounded like an attempt to appeal to ethnicity in order to drive the Andean population away from globalization.
The Bolivian government caused Brazil's Petrobras energy giant to call off a $5 billion investment last month and has now ordered the Bolivian subsidiary of EBX, a Brazilian steelmaker, to stop building a pig-iron plant on Bolivia's south-eastern border (more than $80 million have already been invested and about 1,000 jobs are on the line.) Morales was right at the beginning of his presidency to ask Brazil and Argentina to pay higher prices for their imports of natural gas because they had been getting it at highly subsidized prices. But Morales reached an understanding with Argentina and kept the fight with Brazil. Argentina is closer to the Cuba-Venezuela axis than Brazil, a country that, despite maintaining reservations about Washington's hopes for a Free Trade Area of the Americas, is keeping a clear distance from Castro and Chávez.
Other Bolivian investors are facing problems too. Spain's Repsol has recently announced a big decline in its oil reserves because of a reduction in investment due to Morales' threats to nationalize oil and a law passed by the previous government raising taxes to over 50 percent. Now, Morales has announced his government will take control of the energy prices and the export volumes of foreign companies.
Latin American governments are right to insist on the best trade terms for their countries, and for wanting to insure that indigenous populations get their fair share; but they cannot prosper by cutting themselves off from the most lucrative sources of foreign investment.
Worst still are the domestic political implications of Morales' program. He is flooding his country with Cuban advisers, and taking steps to rig the country's electoral institutions in his favor.
The most important step he has taken to undermine the system's independence is the new electoral register. The overall objective is to pack his constituent assembly, which will be elected this summer, with his supporters and then re-write the constitution to fit his political needs, "a la Chávez." For that, he needs even more votes than he got in his presidential election. He has given the police control of the process by fusing two separate operations -- the creation of a new identity census and a new electoral register -- with the result that the electoral register, which used to be solely controlled by the National Electoral Court, is now handled by the police. It is not surprising that 650,000 new voters have now been added to the electoral register. Venezuelan advisors are also helping Morales with this process.
As if this were not enough to send the wrong kinds of signals, Morales seems happy to stir up trouble in Santa Cruz, the separatist region that has been at political war with La Paz and which is heavily inclined toward globalization because of its strong business community. The government has stopped the tender process for the development of Mutun, a big iron reserve waiting to be exploited. The Bolivian government recently said it is considering a joint venture with a Venezuelan government-owned company to develop iron. Protests have already begun.
Washington of course will take a dim view of all this. The cold war is over, and without the problem of Soviet influence, the U.S. will not intervene. But we can and should make sure that Bolivia is not protected against the consequences of such idiotic policies. Bolivia is heavily dependent upon foreign aid. If Morales is really determined to cut his nation off from globalization, donor nations should get with the program and help him realize his ambition.
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