WSJ on Evo
Wall Street Journal - May 25, 2006
Left Face New President Has Bolivia Marching To Chávez’s Beat
Venezuelan Populist Pushes Anti-U.S. Latin Alliance; Has He Gone Too Far?
Cuban Doctors in the House
By JOSÉ DE CÓRDOBA and DAVID LUHNOW
LA PAZ, Bolivia — Since Evo Morales took office as president here in
January, the coca grower turned socialist politician has aligned his
country so closely with Venezuela’s Hugo Chávez that it is sometimes
difficult to tell where one government begins and the other ends.
After the election of the populist, for instance, foreign steel
companies were told they would have to renegotiate a proposed deal to
develop a huge iron-ore deposit known as El Mutún. But they didn’t
count on facing Venezuelan government experts on the Bolivian side of
the bargaining table.
During an April 25 session with India’s Jindal Steel & Power Ltd.,
two Venezuelan experts whispered into the ears of their Bolivian
counterparts and passed them notes, says Juan Mogrovejo, a
representative of Jindal Steel who attended the meetings. Then the
Bolivians hardened their terms, demanding that the length of the
contract be cut to 20 years from 40. “The proposed contract changed
radically,” Mr. Mogrovejo says. Other companies have also expressed
dismay at the new terms.
Celinda Sosa, Bolivia’s minister of production and microenterprises,
who is involved in the Mutún bid, says Venezuelan advisers are
helping the Bolivians, but the Bolivian government is setting the
policy.
Sometimes that’s not so clear. The two countries recently teamed up
with Cuba in a Free Trade Agreement of the People, a pact dreamed up
by Mr. Chávez as a poor man’s alternative to a U.S. plan for
hemispheric integration. Venezuelan technocrats help set Bolivian
policy on everything from health care to land reform to nationalizing
the oil and natural-gas industry. When Mr. Morales travels outside
Bolivia, he uses a jet provided by Caracas.
Bolivian opposition leader Jorge Quiroga, who lost to Mr. Morales in
the presidential race, contends that “we have become a colony of
Venezuela.” Mr. Morales rejects that accusation, but refers to Mr.
Chávez as Bolivia’s “godfather.”
Bolivia represents Mr. Chávez’s greatest triumph in his drive to use
Venezuela’s oil wealth to create and lead a bloc of anti-American
countries in the region and beyond. He has thrown a lifeline to Cuba,
lent hundreds of millions of dollars to Argentina and Ecuador and has
twice voted to support Iran’s nuclear ambitions in the International
Atomic Energy Agency.
For the U.S., Mr. Chávez’s tightening alliance with Bolivia both
threatens to undo years of political and economic liberalization in
South America and is the latest in a series of energy-security
threats. President Bush on Monday said he was “concerned about the
erosion of democracy” in Bolivia and Venezuela. Venezuela boasts the
biggest oil and natural-gas supplies outside the Middle East, and
Bolivia has South America’s second-biggest natural-gas reserves.
Hitting Limits
As his power and influence grow, Mr. Chávez and his tactics are
running into limits in a region where most people resent outside
interference — be it Spanish rule centuries ago or U.S. intrusion in
recent decades. Support for Mr. Chávez has become a political
flashpoint in races in Mexico and Peru.
Mr. Chávez’s support of Bolivia’s decision to kick out foreign energy
companies this month and nationalize its natural-gas reserves has
also put him in direct confrontation with Brazil, South America’s
largest economy. Brazil depends on Bolivia for half its natural gas,
and Petrobras, Brazil’s state oil company, is the biggest foreign
investor in Bolivia’s energy industry.
Mr. Chávez also may face stiffened opposition at home. Although he is
still highly popular, his overseas spending makes growing numbers of
Venezuelans angry. Despite high oil prices, problems like street
crime and poverty have continued to loom large under his rule.
Hardly a week goes by without an announcement by Mr. Chávez of a new
South American integration initiative. His grand dream is a European
Union-style confederation called the Union of South American Nations,
or Unasur. In addition to his alternative free-trade pact, he has set
up a regional cable and satellite TV network called Telesur, to act
as a counterweight to Atlanta-based CNN. Tomorrow, Mr. Chávez will be
in Bolivia to announce the creation of “Minersur,” a joint Bolivian-
Venezuelan mining venture. Mr. Chávez even has talked about a South
Atlantic Treaty Organization to rival NATO, the North Atlantic Treaty
Organization.
His inspiration is Simon Bolivar, the 19th-century scion of
aristocrats who helped liberate from Spanish rule much of the Andean
region, including what is now Venezuela and Bolivia. Mr. Bolivar
dreamed of uniting the region into a political confederation, but was
thwarted. Mr. Chávez claims he is finishing the work of “The
Liberator,” and even renamed Venezuela the “Bolivarian Republic of
Venezuela.”
As Mr. Chávez did in Venezuela, Mr. Morales has forced out
independent voices at Bolivia’s central bank, judiciary and military.
He has reinserted the state into the oil and gas industry, giving him
a new source of power and patronage. He is also bringing in hundreds
of doctors and teachers from Cuba to provide free health care to the
penniless and teach illiterates how to read, cementing his support
among Bolivia’s majority poor. Next he plans to hold a constitutional
assembly to rewrite the country’s basic principles.
Some within Mr. Morales’s own government fear getting too close to
the Venezuelan president. “We should adopt the good parts of Chávez,
like his attention to the poor. But we need to avoid being polluted
by his bad parts — his need to concentrate power, his cozying up to
regimes like Iran, his constant raving about the U.S.,” says José
Luis Roca, an academic recently named by Mr. Morales to the board of
an oil company seized by the government.
Many Bolivians welcome Mr. Chávez’s largess. On Jan. 23, the day
after Mr. Morales’s inauguration, Mr. Chávez signed half a dozen
cooperation agreements with Bolivia. Venezuela pledged to provide
200,000 barrels per month of crude and refined products at cut-rate
prices, as well as to buy some 200,000 tons of Bolivian soybeans a
year. Mr. Chávez also pledged to buy chestnuts and almonds gathered
by Amazon Indians and to provide some 5,000 scholarships and 100
advanced internships for Bolivians to study in Venezuela.
Bolivian officials deny that they are taking orders from Venezuela,
pointing out that nationalization of the energy industry was a
Morales campaign pledge. But in the weeks before the May 1
nationalization, Venezuelan government engineers accompanied Bolivian
ones in touring installations that were going to be seized, according
to officials from the private companies. Mr. Morales made the move
less than 36 hours after returning from a summit with Messrs. Castro
and Chávez — and then flew with Mr. Chávez to a meeting with the
governments of Brazil and Argentina, whose companies had been hurt by
the move. Bolivia says there is no connection between the
nationalization and the meeting with Mr. Chávez.
Venezuela’s state-owned energy company, Petróleos de Venezuela SA,
known as PdVSA, is a clear winner in Bolivia’s nationalization.
PdVSA, which had no role in Bolivia until a few months ago, has
opened offices in La Paz. It is helping Bolivia’s state energy
company, Yacimientos Petroliferos Fiscales Bolivianos, or YPFB, get
back on its feet after most of its assets were sold off in the 1990s.
Spate of Investments
At a time when other companies are freezing investment in Bolivia,
PdVSA is investing in a spate of projects, including a new gas-
separation plant and jointly owned filling stations with YPFB. In
exchange for such help, PdVSA may get preferential tax treatment
under terms of the recent free-trade deal.
Venezuela is also taking a leading position in Bolivia’s development
of the iron-ore deposits in El Mutún, a poor, sparsely populated area
on the border with Brazil. Under terms set by Mr. Morales’s
predecessor, four of the world’s biggest steel companies expressed
interest in bidding. But that changed soon after Bolivia’s new
planning minister, Carlos Villegas, returned from a recent trip to
Caracas with Venezuelan experts in tow.
For starters, Bolivia’s government wanted the companies to use
natural gas to power the project, rather than wood charcoal. The
companies prefer charcoal because it leads to higher-quality iron
known as pig iron. The government also halved the length of the
proposed contract and said the new operator would have to invest in a
steel mill in addition to simply exporting iron.
As a result of the changes, interest among foreign companies has
waned. “We suspect the government wants to declare the bidding empty,
and then give it to Venezuela under other conditions,” says Jaime
Santa Cruz, who monitors the project for the most powerful civic
group in the state of Santa Cruz, the business capital of Bolivia,
where Mr. Morales’s support is weakest. A spokesman for the Bolivian
Mining Ministry replies that the country is simply trying to get the
best terms on the project. Bids are expected to be opened today and
the contract awarded by May 30.
Mr. Morales has also adopted many of Mr. Chávez’s social programs,
including the use of Cuban doctors and teachers in poor
neighborhoods. An estimated 708 Cuban doctors and volunteers have set
up six clinics that offer, among other things, free eye
consultations. At a Santa Cruz clinic, 200 Bolivians recently stood
in a line that snaked around the block, waiting in the hot sun to get
appointments for an eye examination. The clinic performs 100 free
cataract operations daily. Some patients spent the night sleeping on
the steps of the clinic. “It’s a miracle,” said Juan Alvarez, 56, an
upholsterer awaiting surgery on an eye that clouded up three years
ago after an injury.
Literacy classes are also a big hit. In a cramped classroom on the
wind-swept plateau above La Paz, a few dozen Aymara Indian women and
men gathered around a television set recently to learn the alphabet.
At the end of the day’s session, Hugo Chura, the Bolivian official in
charge of the program, stood up to give a pitch. “Previous
governments here never cared about you,” he said in the Aymara
language. “But the new president does. And he has friends like Fidel
Castro and the Venezuelans who care about you, too.” The class broke
out in applause.
Thanks to such programs, Mr. Morales’s approval ratings now hover
above 80%. That will come in handy in early July, when the country
votes to elect a new assembly to rewrite the constitution.
Earlier this week, members of Mr. Morales’s party said they would
seek a constitutional change to allow re-election. Mr. Chávez used a
similar convention in 1999 to write a new document allowing re-
election and enabling him in the process to gain control of all the
branches of government. Many Latin American nations, fearing a return
to authoritarian rule, limit presidents to a single term. Mr. Chávez
openly talks about staying in power until 2031.
Venezuela has also said it will lend Mr. Morales’s government $100
million to help it implement a potentially explosive promise to
redistribute some 12.4 million acres of state-owned property to
indigenous groups. It would be the first step in an ambitious program
that also seeks to redistribute unproductive private land or lands
that don’t have clear title.
In Bolivia, land reform is a time bomb, analysts say. That’s because
each year, tens of thousands of peasants from the hardscrabble Andean
region migrate to the eastern lowland plains, a region whose relative
prosperity is based on large-scale agriculture. Many landowners here
fear Mr. Morales will encourage politically motivated land invasions
by poor Andean immigrant peasants, who overwhelmingly support him.
“It could lead to a civil war,” says Ruben Costas, the governor of
Santa Cruz.
Like Mr. Chávez before him, Mr. Morales is also attacking independent
power centers. In addition to purging the military of high-ranking
officers, Mr. Morales decreed that every public official had to
accept a pay cut of almost 50% and stipulated that no bureaucrat
could earn more than his own wage of about $22,000 a year. Since
then, five out of 12 Supreme Court justices, the country’s top
election judge and top bureaucrats in a clutch of key ministries have
left their posts. They have been replaced by officials from the
president’s Movement Toward Socialism party with little or no
experience.
At Bolivia’s central bank, economist Juan Antonio Morales brought
badly needed stability to Bolivia’s notoriously shaky economy after
taking office as chief in 1995. The banker’s term expired on three
occasions, but every time the sitting president urged him to remain.
A few months ago, Mr. Morales’s term was up again, and he sent the
new president a resignation letter. He found out it was accepted when
his wife phoned to say she had just heard about his replacement on
the nightly news.
Mr. Morales says he had never heard of his successor before.