The smell of gas hangs strongly in the air as a crowd of flag-waving Bolivians celebrate outside the Petrobras Gualberto Villaroel oil and gas refinery. A state worker clad in a tan work suit and hardhat props a wooden ladder against the front wall of the refinery just beneath the blue metal letters that read PETROBRAS, and ascends the ladder as the crowd looks on.
He carries a laminated banner with the name, “Yacimientos Petroliferos Fiscales Bolivianos” or YPFB,
“Take down the placard!” someone yells from the crowd. “Throw the letters in the trash!” someone else shouts, making a rhyme with the Spanish words.
As the worker struggles a bit to secure the banner over the blue letters, someone in the crowd observes, “No, they’re not going to take it down, just cover it over.”
As the banner is secured, someone calls out, “Que viva
“Que viva!” the crowd erupts in response.
It’s Monday, May 1st, not coincidentally International Workers Day, and the Bolivian government has just declared the nationalization of oil and gas by presidential decree.
Though the “nationalization” and “recovery” of
Nationalization by Decree
Under the main goal of recovering “the property, possession, and total and absolute control” of oil and gas resources for the state, Decree 28701 contains five principal measures:
– Declaration of the state the agent empowered to commercialize, set conditions, volumes and prices both for internal consumption, export, and industrialization, and to take “control and direction” of all aspects of oil and gas production and distribution.
-Establishment of a 180-day time period for the renegotiation of contracts to bring them in line with the oil and gas law 3058 passed last year.
-Recovery of 51% of the shares of five capitalized companies, carved out of the state company in 1996.
-Increase of the tax and royalty level from 50% to 82% for companies operating in
-An audit of investments and earnings for all other oil and gas companies operating in
While the discourse of the day is powerful, punctuated by the imagery of the securing of the country’s 56 oil and gas fields and two refineries by the Bolivian military, the real extent and impact of the government’s policy are not yet clear.
The recent oil and gas debate in
At the same time, many see the government’s plan as the key to much needed economic development and as a means of recovering state sovereignty in a country that historically has been managed in the interests of foreign capital. “The recovery of the oil and gas resources is what
The potential increase in government revenues through the elevation of tax and royalty rates from 50% to 82% will be very significant for this impoverished nation, but is an unexpected move by a government which previously was exploring more cautious options. The figure of 82% is also highly symbolic in that it is the inverse of the 18% tax rate put in place during the privatization process in 1996. What the companies were putting in their pockets as recent as a year ago, will now be what
Many aspects of the decree, however, remain to be determined and its true impact will depend on the details of its implementation over the coming months. The mechanism for the recovery of majority shares in the capitalized companies remains unspecified, as does the treatment of the 54 fields not impacted by the tax rate increase. The government calls the decree “flexible and consensual.” However, they have made it clear that those companies unwilling to play by the new rules of the game will not be allowed to remain in
Domestic business interests have reacted with concern, though without marshalling a strong challenge. Many support the concept of recovering greater state control, but fear economic instability and warn against the possibility of costly international litigation by transnational companies. The response by foreign investors has been strong, though still not completely bellicose. Brazilian President Lula called the move “unfriendly” while
From La Paz’s main plaza, in a skillfully orchestrated event weaving together the nationalistic historical memory of Bolivia’s previous two oil nationalizations with the class themes of International Workers Day, President Morales addresses a crowd of thousands urging Bolivians to come together to defend this new endeavor.
Meanwhile, back at the Gualberto Villaroel refinery outside
“We will now engage in a symbolic entrance of YPFB technicians in which we will give official notification [to Petrobras] that as of this moment this refinery will be administered by YPFB.”
Escalera asks the crowd to refrain from trying to enter the refinery, warning that such an action could jeopardize the nationalization process. As the group of around fifteen technicians and representatives pass through the front gates of the plant, a military band strikes up the national anthem as the crowd sings. Young soldiers proceed through the gates carrying a giant Bolivian flag.
Returning back through the front gates after several minutes, with little fanfare, Escalera notifies the crowd, “We have now recovered this refinery…You may now all return home.”
With the waning notes of a brass band, Bolivia’s “nationalization without expropriation” advances, as has Morales’ broader “democratic revolution,” without violence or disruption, and to the great surprise of most onlookers.
The question which remains is how much will this nationalization secure a profound change for
Gretchen Gordon is a research associate with the Democracy Center in Cochabamba,