Bolivia: Politics win round on energy

In a key referendum, most of Bolivians supported official bill to allow authorities to take control of oil wells and vast gas reserves. The hydrocarbon vote had been angrily rejected by trade unions and far left organizations, which had called on a boycott. President Carlos Mesa can feel safe now.

Despite calls from powerful trade unions and far left peasent organizations to boycott the referendum, over 60% of Bolivians attended to the polls on Sunday and the country is ready now to take control of oil wells and gas reserves. President Carlos Mesa, who fueled the five-part proposal as much as he could and somehow tied his future to Sunday’s results, can now smile as a defeat in the polls could have meant a premature end to his unstable rule.

However, despite his victory in the polls, Mesa will have to work hard to put people’s mandate into action. As for now, Mesa will send congress a proposal by Thursday to restore government management of South America's second-largest gas reserves and raise taxes on producers such as Madrid-based Repsol YPF SA. Congress has 90 days to pass the proposal, which a majority of voters supported in yesterday's referendum, according to a tally so far of almost 25 percent of the vote.

“These are five resounding votes in favor of a new rationale for our petroleum industry,'' Mesa said during a televised news conference from La Paz, Bolivia's capital. Mesa looked and sounded confident as could defeat the internal opposition wthout the use of force.

However, Mesa is not the only winner, to obtain the support of the majority of Bolivians to the referendum, the Bolivian president had to obtain the support of Evo Morales, peasant leader and head of the center-leftMovement toward Socialism (or MAS by its initials in Spanish). Morales, hated by Washington due to his leftist tendences and equally supported by Argentina and Brazil as a key factor in the political stability of the country, has became the strongest man in the opposition and, perhaps in the Bolivian politics.

Mesa and Morales defeated leftist trade unions and tribal leaders, who had threatened with a widespread boycott to the referendum, but everything was normal on Sunday. Passage of the five-question referendum was critical for Mesa to show he has a mandate to stay in power after opposition to oil coroprations to export gas via a Chilean pipeline sparked strikes and protests last year. At least 70 people were killed in violence that forced Gonzalo Sanchez de Lozada, 74, to resign as president in October.

Mesa's proposal would allow exports of gas from Bolivia, although the government hasn't said what kind of restrictions would be placed on such projects. Opponents of Repsol's $5 billion proposal to sell gas to Mexico and the U.S. drew opposition from indigenous groups and political parties who said not enough of the proceeds would flow to Bolivia's poor.

The proposal also would increase taxes and royalties on production to as much as 50 percent, up from 38 percent, at Bolivia's four largest oil fields. It also would revive the state oil company Yacimientos Petroliferos Fiscales Bolivianos, or YPFB, to manage production with oil companies in Bolivia, which include Repsol, London-based BP Plc, Reading, England-based BG Group Plc and Paris-based Total SA.

Now, after defeating internal opposition to his plans, Mesa will have a tough fight to sit oil international coroporations back into the table and tell them that the party is over and they cannot keep on making formidable profits at the cost of the exploitation of the Bolivian poor and the permanent social unrest.

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Author`s name Andrey Mikhailov