Is Evo Morales really taking that large of a risk? The "nationalization" of Bolivia's natural gas industry has been widely reported by the Western media. In typical fashion of the corporate media, these reports barely skim the surface of Bolivian domestic forces and how Bolivia interacts with the global economic community.
Will the international financial faucet turn off?
Will the US send CIA ops in to depose of Morales?
How will Brazil cope with a poor nation attempting to rebuild a state owned gas industry?
All these questions have been bandied about in the last week, since the news broke of Evo Morales sending troops in to occupy the oil fields. Typical of the American media, much has been made of the "nationalization" project undertaken by Evo (link provided above takes you to the Guardian, who provide a more well rounded take on the situation). Perhaps they use the term to sensationalize the event, or perhaps they were simply parroting Mr. Morales. Yes, Evo has a lot to gain by broadcasting to his people the nationalization of their most important industry.
It was a brilliant political move. For as the Guardian notes:
Analysts said the president's rhetoric was unlikely to lead to a full-scale transferral of production to the state, and was more likely to be the first move in a significant renegotiation of contracts with the foreign companies.
"No one's talking about nationalisation in terms of grabbing assets," said John Crabtree of Oxford University. "In the case of Morales [the word is] being used ambiguously, I think."
And paraphrased from Mr. Morales
Mr Morales said the state would also recover Bolivian hydrocarbon companies that were privatised in the 1990s. Foreign companies will be reduced to operators.
And according to Britain's BG Group
the "main point" of Mr Morales's speech had been "the new contracts that need to be renegotiated in the next 180 days".
Contract negotiations? Foreign owned assets? This simply is not nationalization. The revived Bolivian companies (Chaco, Andina and Transredes) will now essentially oversee production and transporation, as managed by the current foreign operators. The foreign presence will be relegated to operating the infrastructure, under the guidance of the Bolivian state. But they still will be absolutely present and vital to the continued operation of the industry.
Herein lies the Evo's brilliance: had Morales literally nationalized the industry, he would have thrown out these operators and installed the state as the operators of the production facilities. This would cost an enormous amount of capital that Bolivia simply does not possess (both in terms of manpower and financial capital). Doing so would also severely strain Bolivia's ties to its international creditors, given the bedrock principle of privatization embedded within the Bolivian loan frameworks.
As it currently stands, Morales has managed a trifecta of catering to the nationalist sentiment of his domestic base, kept the spigots running by keeping the foreign presence to run the facilities, and has given a strong shove against the notion of privatization but not nuked it entirely. The former was absolutely crucial to Morales who ran on a nationalization platform, and had to deliver quickly upon his pledges in order to keep his star shiny. With his liberal use of the term "nationalization," Morales keeps his credibility with his people. It's big political hype.
However, those Bolivians who see through the hype will at least recognize the manner in which Morales forced the hand of these foreign companies. Simply asking nicely would not get contracts renegotiated and made more equitable. The shock value of state troops entering private, foreign owned land will net the Bolivian government significant revenue gains. Assuming Morales has played the hand correctly, correctly balancing domestic needs against international financial realities, he may succeed where many (such as Iran's 1951 to 1953 PM Mohammed Mossadegh) have failed.