News summary update 2006-02-12
Fortnightly summary of news in Bolivia
FOCUS ON BOLIVIA
12.02.05
NEW GOVERNMENT
• Morales flew to Santa Cruz province to see flooding first hand, which has caused 13 deaths and at least 34,000 displacements across the country. Aid arrived from Cuba and Venezuela. Funding of up to $500 million was also due from the Inter American Development Bank, the Andean Development Corporation, US and Japan
• President Morales met with CAINCO, the main Santa Cruz business federation at which they agreed to work together. CAINCO asked for clear rules for business and expressed concerns about changes in labour laws, financial administration and external trade negotiations. Morales promised “security of investments,” said he wouldn’t change the financial system, and said he wanted to work with businessmen to develop the country. He also promised to advance with the bidding for the controversial Mutun mining project
• Government faced its first protests and conflicts. The first was overcome when Morales met with a sector of plain-clothed security police and promised to give them similar rights and pay to national police. Morales’ decision, however, to renew decree 28614 which extends time-limit for importing used clothing to 31 July 2006 raised prospects of ongoing protests by national and small-scale textile workers. However used-clothing sellers welcomed the decision. According to El Deber, the economy made losses of $500 million (6% of GDP) due to imports of used-clothing and has lost 107,000 jobs in 6 years. Villegas, Planning and Development Minister appealed for time to develop a policy that works for both the textile and used-clothes industry.
• An announcement by Bolivian Government that they could not offer more than a 7% pay raise (to a basic salary of 824 Bolivianos or ₤59) to teachers due to the “economic reality of the country” also prompted warnings of strikes and actions by teachers unions who demand a basic monthly salary of 1500 Bolivianos (₤107)
• A meeting of union leaders in El Alto warned the President that they would force him to resign like previous Presidents if he does not fulfil his promises to nationalize hydrocarbons, raise wages, give land to small-scale farmers, and eradicate neo-liberalism by repealing laws of capitalisation (Bolivian form of privatisation) and pension and education reform.
• In Morales’ cabinet, seven of the 16 ministers have union roots with the rest having worked closely with MAS. Forty-one of the 47 Vice Ministers have technical backgrounds.
• Abel Mamani, new Minister of Water and former leader of El Alto Residents Association, FEJUVE, said his new Ministry would have 120 staff. He made it clear that Aguas del Illimani (the privatized water utility largely owned by French multinational Suez) would be removed but said as government “he would act responsibly.”
INTERNATIONAL RELATIONS
• Morales expressed his surprise at receiving a phone-call of congratulations from the US President Bush, where they talked of establishing "constructive relationships." Morales said he had invited Bush to visit and had called for an extension of trade preferences for Bolivia beyond 2006 (when the Andean Trade Promotion and Drug Enforcement Act) is due to finish. Negroponte, head of the CIA said the MAS government was still sending "ambiguous signals" about its future direction on drug eradication and nationalisation. Other commentators remarked that the US administration was keen not to take actions that would push Morales towards Chavez.
• US Government announced cuts in military and anti-drugs programme aid. New York Times said military aid was cut by 96% but further analysis showed it was a cut of more like 18-25% and is tied to Bolivia’s refusal to sign an exemption from prosecution in the International Criminal Court for US troops last year. Bolivia is one of 12 countries in the Latin America and Caribbean who have suffered cuts for refusing to sign. Bolivia is still however expected to send 61 students to the controversial School of Americas military training programme.
• The diplomatic community in a meeting with Morales stressed their willingness to support anti-poverty efforts but said there must be “security” for investments. An international firm, AON put Bolivia as a “high risk” country for investments along with Venezuela, Ecuador, Cuba and Haiti
COCA
• Coca heated up as an issue as the Government found itself caught between dissatisfaction of coca-growers of rapid change and a US Government sceptical of Morales “yes to coca, no to cocaine” programme. The Government was forced to intervene to end a hostage-taking of a member of a drug-eradication scheme and anger in Chapare at their choice of Minister for Social Defence (responsible for cocaine eradication). Morales then faced an announced proposed cut by the US in their anti-drugs programme (spent on eradication, prohibition and alternative development). Although this followed a trend of cuts since 2001 (aid was $117.2 million in 2001) to $80 million in 2006 and $67 million in 2007, coca leaders interpreted the cut as a means of pressurizing the Government.
• Morales called on the US to reverse the cut to meet the objective of “zero narco-trafficking”. At the same time, he urged coca-farmers to respect the limit of growing one “cato” (1,600 square metres) to “stop the US talking badly about us.” Many coca-growers said that the legally allowed level of coca-growing (known as a cato, 17,222 square feet) should be increased by at least three. Experts say coca grown for cocaine production now covers around 27,181 acres, more than three times the legal allotment in the Chapare.
• Foreign minister Choquehuanca announced an international campaign to promote the proper use of coca. President of the Community of Andean nations (CAN) gave backing to the legalization of coca at the level of the UN and exploration of industrializing its uses.
HYDROCARBONS
• Bolivia’s future energy and hydrocarbon’s policy will be decided by a national commission involving different sectors and regions stated Morales’ spokesperson Alex Contreras. The commission was announced after various declarations and statements by Prefects in regions of Cochabamba, Santa Cruz and Tarija criticizing a centralist hydrocarbons policy
• Bolivia’s state hydrocarbons firm YPFB signed a deal with Petrobras to develop joint ventures worth $ 5 billion dollars in refining and oil and gas exploration and development as well as the development of ethanol and other fuels and the possible installation of a petrochemical complex on the Brazil-Bolivia border. A Brazilian government official said that “Petrobras had no problems with the Hydrocarbons law.”
• Reports in the FT that Repsol and Total were prepared to drop a threat to take Bolivia to international arbitration were ruled out as "completely false" by a reliable source who spoke to Investment Treaty News. Apparently the so-called triggering letters sent by more than half-a-dozen multinational firms, warning Bolivia of potential claims under bilateral investment treaties and setting in motion mandatory 3 or 6 month negotiating windows, remain very much in place.
• Evo Morales and various ministers said they had uncovered evidence of a “plot” by various energy multinationals to destabilise the Government, but said they would release evidence only after further investigation. Petrol companies in a public statement rejected the claims saying they “respected the established order”
• Soliz, Ministry of Hydrocarbons announced that they were changing the “capitalization law” (a form of privatization of state hydrocarbons sector) to recover shares in capitalized firms, (Chaco, Andina and Transredes) that are held currently by pension funds and transfer them directly to state firm YPFB
CONSTITUENT ASSEMBLY/AUTONOMY
• Morales in a meeting with social movement leaders called for a constituent assembly “without limits” which would “reorganize Bolivia from scratch” so that the country is more “equitative and inclusive.” He said social movements would be required to guarantee its success because it would need pressure to ensure it was passed by two-thirds of the Congress (a majority MAS doesn’t have)
• MAS made a proposal for elections to constituent assembly based on three candidates per “uninominal” constituency (total of 210). For gender balance, it proposed where the leading candidate was a man, the second should be a women and vice-versa. Indigenous groups expressed disappointment at the lack of an indigenous quota and have submitted their own proposals. Other parties and prefectures pushed for a system based on elections per department with less overall constituent members. The proposals will be examined together in a Commission.
OTHER NEWS
• Secretary General of CAN called on Colombia, Ecuador and the US to keep in mind the impact an Andean Free Trade Agreement (AFTA) would have on Bolivia’s soya exporters. Under AFTA, Bolivian exports of soya to Andean countries (its largest export sector) would suffer immensely as it would not be able to compete with tariff-free imports of subsidized US soya. Bolivian and Colombian movements against the Andean Free condemned as “blackmail” an offer by the Colombian government to defend Bolivia’s preferences for soya in exchange for Bolivia agreeing to change CAN agreements to extend patents. This would allow Colombia to sign FTA with the USA which is demanding greater patent rights for its pharmaceutical industry.
• The mining sector in Bolivia is booming (grew 20% in 2005) in part due to growing demands from China and India and rising prices for gold and silver. One mine, San Cristobal is expected to provide 40% of Bolivia’s mining exports in coming years making it the third largest silver mine in the world.
12.02.05
NEW GOVERNMENT
• Morales flew to Santa Cruz province to see flooding first hand, which has caused 13 deaths and at least 34,000 displacements across the country. Aid arrived from Cuba and Venezuela. Funding of up to $500 million was also due from the Inter American Development Bank, the Andean Development Corporation, US and Japan
• President Morales met with CAINCO, the main Santa Cruz business federation at which they agreed to work together. CAINCO asked for clear rules for business and expressed concerns about changes in labour laws, financial administration and external trade negotiations. Morales promised “security of investments,” said he wouldn’t change the financial system, and said he wanted to work with businessmen to develop the country. He also promised to advance with the bidding for the controversial Mutun mining project
• Government faced its first protests and conflicts. The first was overcome when Morales met with a sector of plain-clothed security police and promised to give them similar rights and pay to national police. Morales’ decision, however, to renew decree 28614 which extends time-limit for importing used clothing to 31 July 2006 raised prospects of ongoing protests by national and small-scale textile workers. However used-clothing sellers welcomed the decision. According to El Deber, the economy made losses of $500 million (6% of GDP) due to imports of used-clothing and has lost 107,000 jobs in 6 years. Villegas, Planning and Development Minister appealed for time to develop a policy that works for both the textile and used-clothes industry.
• An announcement by Bolivian Government that they could not offer more than a 7% pay raise (to a basic salary of 824 Bolivianos or ₤59) to teachers due to the “economic reality of the country” also prompted warnings of strikes and actions by teachers unions who demand a basic monthly salary of 1500 Bolivianos (₤107)
• A meeting of union leaders in El Alto warned the President that they would force him to resign like previous Presidents if he does not fulfil his promises to nationalize hydrocarbons, raise wages, give land to small-scale farmers, and eradicate neo-liberalism by repealing laws of capitalisation (Bolivian form of privatisation) and pension and education reform.
• In Morales’ cabinet, seven of the 16 ministers have union roots with the rest having worked closely with MAS. Forty-one of the 47 Vice Ministers have technical backgrounds.
• Abel Mamani, new Minister of Water and former leader of El Alto Residents Association, FEJUVE, said his new Ministry would have 120 staff. He made it clear that Aguas del Illimani (the privatized water utility largely owned by French multinational Suez) would be removed but said as government “he would act responsibly.”
INTERNATIONAL RELATIONS
• Morales expressed his surprise at receiving a phone-call of congratulations from the US President Bush, where they talked of establishing "constructive relationships." Morales said he had invited Bush to visit and had called for an extension of trade preferences for Bolivia beyond 2006 (when the Andean Trade Promotion and Drug Enforcement Act) is due to finish. Negroponte, head of the CIA said the MAS government was still sending "ambiguous signals" about its future direction on drug eradication and nationalisation. Other commentators remarked that the US administration was keen not to take actions that would push Morales towards Chavez.
• US Government announced cuts in military and anti-drugs programme aid. New York Times said military aid was cut by 96% but further analysis showed it was a cut of more like 18-25% and is tied to Bolivia’s refusal to sign an exemption from prosecution in the International Criminal Court for US troops last year. Bolivia is one of 12 countries in the Latin America and Caribbean who have suffered cuts for refusing to sign. Bolivia is still however expected to send 61 students to the controversial School of Americas military training programme.
• The diplomatic community in a meeting with Morales stressed their willingness to support anti-poverty efforts but said there must be “security” for investments. An international firm, AON put Bolivia as a “high risk” country for investments along with Venezuela, Ecuador, Cuba and Haiti
COCA
• Coca heated up as an issue as the Government found itself caught between dissatisfaction of coca-growers of rapid change and a US Government sceptical of Morales “yes to coca, no to cocaine” programme. The Government was forced to intervene to end a hostage-taking of a member of a drug-eradication scheme and anger in Chapare at their choice of Minister for Social Defence (responsible for cocaine eradication). Morales then faced an announced proposed cut by the US in their anti-drugs programme (spent on eradication, prohibition and alternative development). Although this followed a trend of cuts since 2001 (aid was $117.2 million in 2001) to $80 million in 2006 and $67 million in 2007, coca leaders interpreted the cut as a means of pressurizing the Government.
• Morales called on the US to reverse the cut to meet the objective of “zero narco-trafficking”. At the same time, he urged coca-farmers to respect the limit of growing one “cato” (1,600 square metres) to “stop the US talking badly about us.” Many coca-growers said that the legally allowed level of coca-growing (known as a cato, 17,222 square feet) should be increased by at least three. Experts say coca grown for cocaine production now covers around 27,181 acres, more than three times the legal allotment in the Chapare.
• Foreign minister Choquehuanca announced an international campaign to promote the proper use of coca. President of the Community of Andean nations (CAN) gave backing to the legalization of coca at the level of the UN and exploration of industrializing its uses.
HYDROCARBONS
• Bolivia’s future energy and hydrocarbon’s policy will be decided by a national commission involving different sectors and regions stated Morales’ spokesperson Alex Contreras. The commission was announced after various declarations and statements by Prefects in regions of Cochabamba, Santa Cruz and Tarija criticizing a centralist hydrocarbons policy
• Bolivia’s state hydrocarbons firm YPFB signed a deal with Petrobras to develop joint ventures worth $ 5 billion dollars in refining and oil and gas exploration and development as well as the development of ethanol and other fuels and the possible installation of a petrochemical complex on the Brazil-Bolivia border. A Brazilian government official said that “Petrobras had no problems with the Hydrocarbons law.”
• Reports in the FT that Repsol and Total were prepared to drop a threat to take Bolivia to international arbitration were ruled out as "completely false" by a reliable source who spoke to Investment Treaty News. Apparently the so-called triggering letters sent by more than half-a-dozen multinational firms, warning Bolivia of potential claims under bilateral investment treaties and setting in motion mandatory 3 or 6 month negotiating windows, remain very much in place.
• Evo Morales and various ministers said they had uncovered evidence of a “plot” by various energy multinationals to destabilise the Government, but said they would release evidence only after further investigation. Petrol companies in a public statement rejected the claims saying they “respected the established order”
• Soliz, Ministry of Hydrocarbons announced that they were changing the “capitalization law” (a form of privatization of state hydrocarbons sector) to recover shares in capitalized firms, (Chaco, Andina and Transredes) that are held currently by pension funds and transfer them directly to state firm YPFB
CONSTITUENT ASSEMBLY/AUTONOMY
• Morales in a meeting with social movement leaders called for a constituent assembly “without limits” which would “reorganize Bolivia from scratch” so that the country is more “equitative and inclusive.” He said social movements would be required to guarantee its success because it would need pressure to ensure it was passed by two-thirds of the Congress (a majority MAS doesn’t have)
• MAS made a proposal for elections to constituent assembly based on three candidates per “uninominal” constituency (total of 210). For gender balance, it proposed where the leading candidate was a man, the second should be a women and vice-versa. Indigenous groups expressed disappointment at the lack of an indigenous quota and have submitted their own proposals. Other parties and prefectures pushed for a system based on elections per department with less overall constituent members. The proposals will be examined together in a Commission.
OTHER NEWS
• Secretary General of CAN called on Colombia, Ecuador and the US to keep in mind the impact an Andean Free Trade Agreement (AFTA) would have on Bolivia’s soya exporters. Under AFTA, Bolivian exports of soya to Andean countries (its largest export sector) would suffer immensely as it would not be able to compete with tariff-free imports of subsidized US soya. Bolivian and Colombian movements against the Andean Free condemned as “blackmail” an offer by the Colombian government to defend Bolivia’s preferences for soya in exchange for Bolivia agreeing to change CAN agreements to extend patents. This would allow Colombia to sign FTA with the USA which is demanding greater patent rights for its pharmaceutical industry.
• The mining sector in Bolivia is booming (grew 20% in 2005) in part due to growing demands from China and India and rising prices for gold and silver. One mine, San Cristobal is expected to provide 40% of Bolivia’s mining exports in coming years making it the third largest silver mine in the world.
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