Ciao!

There goes the rentier state...

On a sidenote:

Another "austerity" measure has been the slashing of salaries in state owned or sponsored institutions like Cochabamba's Universidad Mayor de San Simon were all salaries have been capped at a some 15,000 bolivianos or about US$ 1,800 per month "because no-body, not even that Phd from Louvain dean that they had can earn more than EVO [the president]" I read in Los Tiempos that most authorities were retiring en masse as a protest.

The same is replicating even for non-hierachical non-appointed jobs [e.g. nurses, engineers or accountants] were people who entered a position not by appointment but by their own abilities (concurso de meritos) are having their salaries slashed. It's a sorry state of affairs for Bolivia's middle class.

who was managing the BONOSOL previously? was it a political appointment as well?

and if Alvarado was running the CCB waterworks, did he have a role in the storied water war? (I assume he ran it after re-nationalization, but was he involved in the uprising?)

The possibility (fear) that YPFB will become a political tool/financial machine is being mentioned in various television and news outlets here in Bolivia.

Whether such press coverage will keep any potential abuses in check, one cannot say - but at least it's a good thing that this is being discussed locally.

Reports often begin with "With fears that MNR's actions may be repeated..."

Just a fence-straddling FYI.

Mike D:

I posted an update to answer your BONOSOL question, above. As for what Alvarado was doing before 2002, I'm not entirely sure. Though his quick rise through the MAS ranks (and his appointment to that sensative position) suggests he was quite involved (as an activist) in the Cochabamba water war & a long-time MAS supporter (that is, since at least 2002, when the party first ran a slate of candidates).

Not sure, but this certainly looks like Morales is doing some creative bookkeeping to give YPFB some quick capital, possibly to make YPFB appear more financially stable/secure.

If so, I would say this doesn't look like a particularly promising development since it opens up this pension fund to larger risk by using its resources to develop the NG--with the negative attitude of international investors on the nationalization, that might be a risky bet.

Any word yet on what Chavez has promised Morales on this? I would love to know what they talked about in Havanna recently.

Also, what's the latest on the Chinese-Bolivian relationship? I know Morales has visited Beijing a couple times and China is running around the globe snapping up energy--perhaps Morales is betting on the dragon instead of the eagle...

Not sure on all the details, since I'm neither there nor privy to the private conversations between leaders. But. It does look like Evo's making a play to put money into YPFB, by stealing from the pensioners' piggy bank. Which is sad.

Also, not sure what Chavez will or won't do. And w/ that guy, you never really know, frankly. But there's the danger that Venezuela could supply Brazil & undercut Bolivia (there are rumors & hints). And Brazil -- which has already frozen future investnment plans for Bolivia -- might just go shopping elsewhere (it's been looking at other options for a while). Also, the day Evo announced the nationalization, Brazil had just announced that it's new domestic plants went online & left the country "energy self-sufficient".

Since Brazil is the Bolivia's largest gas buyer, losing them as a market will be harsh blow. Brazil can buy its gas anywhere (it's also a major producer). But Bolivia has limited shipping options, especially if it doesn't want to ship through Chile. Even if China buys Bolivian gas, they'll demand a low price in exchange for the high cost of transporting it.

I keep coming back to thinking that this was probably a propaganda move (or just poorlyl thought-out policy option) that will cost Bolivia too much in the long term. Once the euphoria of the "historical event" dies down, and Chavez goes back to putting Venezuela (or, rather, himself) first, Evo will be left holding the bag.

Patrick, according to the Financial Times, the Chinese company Shanong Lundeng withdrew its name from the bidding process for el Mutun. So what's up? the prefered company for Morales if there ever was one, doesn't like to be messed with either.

Read the note here:
http://news.ft.com/cms/s/b1c13390-d2ec-11da-828e-0000779e2340,dwp_uuid=84f5e444-845b-11da-b3f3-0000779e2340.html

Oh yeah, they gave me a link and I didn't even know it till yesterday.

I was at a dinner last night where a very well respected São Paulo consultant was speaking, and when the conversation inevitably turned to the Bolivian standoff, he was really glum.

While Brazil does have natural gas reserves, and can get natural gas from elsewhere, given the infrastructure requirements of natural gas, those are both medium- to long-term solutions. He said that Brazil will have to buy Bolivian natural gas at whatever price Bolivia offers, because it fuels 70% of São Paulo and 100% of the southern states. The consumer won't feel the pinch until the end of the year, as Lula will subsidize prices until after the election.

What this does for Brazil's fiscal situation I'm not sure.

Mexico is reportedly back in the running for Bolivia's gas. For all the talk from all of these countries and companies that they don't need Bolivia's gas and it can go eat its own gas, they all come running back because it powers the world economy. It has been rare when Bolivia has had a true bargaining chip and a president actually takes advantage of that.

I thought Brazil announced that it was oil self-sufficient, but still relied heavily on imported gas.

Oh, I agree that lots of buyers are probably still interested in Bolivian gas reserves. But there's also a limit to how much they're willing to pay. And any financial hits on those countries (Mexico, Brazil, Argentina) can have serious repercussions for the world economy -- and those effects will principally be felt by small countries that are heavily import-dependent.

But that's also a whole separate issue from the problem that the new YPFB restructuring looks like it's being used to fuel the Evo/MAS political agenda, which is troubling in terms of transparency & fiscal responsibility (not to mention clientelism, nepotism, and corruption).

I'll wait to see how this effects the Bolivian economy in other areas. Especially in the long term (five, ten years out). Historically, state-run enterprises have been miserable failures in Latin America. And particularly in Bolivia.