Ciao!

On the issue of what I call "Gas Diplomacy", Mesa might be pressing the right buttons.

While it is true, at least it appears, there is little international interest on the issue of sea access for Bolivia, I think Bolivia and the Mesa administration are pressing in all the right places on the issue.

Mesa has irrevocably linked the export of Bolivia's gas reserves with sea access through the referendum and with his newly proposed Hydrocarbons Law. As a result, Chile has rejected any possibility of political negotiations, however, there is tremendous pressure on the Government of Chile from private sector companies who can hardly contain on their desire to get a piece of the pie. At the same time, Chile has a necessity to get new energy, and that means gas.

Additionally, the GOB uses every international venue it has to remind the international community that sea access and economic development are one in the case of Bolivia. This policy has already had results with Mr. Annan voicing concern about the resolution of the conflict. That is something.

Another result is the support voiced by other governments in the region like the Brazil and Venezuela. Granted Venezuela and Chavez do not have the best image right now, but they do have weight on the region.

Even though these are just signs and they are far from being concrete solutions, I think, if Mesa continues applying pressure the way he has been doing it, they might just bring Chile to the negotiating table whether it wants it or not.

In the end, though, I don't think the international pressure of Chile will ammount to much. Once the cost (economic, politically, etc) of opening Bolivia's gas export market rises to a certain level, it's just not worth the cost. Bolivia has little gas in an international market. We already saw that California would rather buy from Indonedia, than deal w/ Bolivian uncertainties. And while Bolivian gas might be important, Chile is more important internationally as a market for consumer goods (richer population) and it's export goods/services.

Also, I think Chavez' efforts to support Bolivia are more self-serving. The Venezuelan oil & gas industry is in hard times lately, eliminating a competitor from the regional market can only help prop up Venezuela's export share.

It's interesting you say so. I have written this
article on Bolivian Gas, where I take a look at the world reserves. In fact, Bolivia's reserves are nothing compared to the reserves in Qatar, for example.

I agree that in the end, international pressure might result in nothing. However, recent descenting voices have been speaking out within Chile. Plus, Chile has a lot to lose if Bolivia and Chile keep going on with this feud. There is a lot of money to be made for the Chileans. Not only in exports, but also, say with a common market. Chilean companies are eager to take over some services in Bolivia. I know it is a far out idea, but I would be willing to wait a little loger before I give my veredict.

MB: I agree w/ you about being to early to tell. But I just don't see Chile as really needing Bolivia for much (besides as a market for cheap agriproducts). It seems more like Chile's pestered, or annoyed, than really troubled. W/ privatization scaling back in Bolivia, I doubt anyone's thinking of entering the market, and investing in Bolivia has suddenly become high-risk. I think Chile would welcome a free trade agreement, but Bolivians seem to want "sovereign" rights to some Chilean territory -- and I just don't think that's going to happen. So long as Mesa insists on sovereign territory *before* a free trade agreement, the Chileans won't budge. Just my opinion. Plus, w/ the current situation, how long can we count on Santa Cruz or Tarija remaining parts of Bolivia? If they secede, the question becomes academic, since the rest of Bolivia wouldn't have much gas to negotiate w/.

I acknowledge it is a hard argument to make. I am not really convinced myself, but the reactions of the Chileans are making me doubt. There are currently cabinet level talks between the two countries related to this issue. If Chile would not need Bolivia, as you say, why not stop all contact and wait it out? It is clear they are annoyed but they still want to remain in contact.

Investment in Bolivia has always been risky, that has been a factor to consider when investing in Bolivia. Nevertheless, companies keep coming.

As far as the secession question, that would be a shame if it happens. I know Santa Cruz has a group of people, mainly business people, who are really pushing for it. I am just not sure Sta. Cruz would be better off. By that I mean the people and not the proponents of secession. The secessionists are after power and money, they will be taken cared of.