By TOM LEWIS

BOLIVIAN LABOR leader Oscar Olivera, the principal spokesperson for the Coalition for the Defense and Recovery of Natural Gas, announced in March that, “The fight to the death for the recovery of our natural resources from the transnational corporations has begun.” Olivera’s statement captured the significance of what at the time represented five months of struggle over the privatization of water and natural gas—the epicenter of which has been the working-class, and largely indigenous, city of El Alto.

The surge of social protest in March twice caused Bolivian president Carlos Mesa to offer to step down. Each time the Bolivian legislature rejected his resignation. Mesa claimed that the social movements have made his country “ungovernable” and that their goal of ending or modifying existing contracts with transnational corporations amounts to “international financial suicide.”

While opposing Mesa’s policies, protesters had not called for Mesa’s resignation. Left-wing observers saw in Mesa’s actions an attempt to blackmail the social organizations and unions into backing down from two key demands: the end to water privatization in El Alto and the repeal of gas privatization across the nation.

Led by the Federation of Neighborhood Councils (FEJUVE), tens of thousands engaged in strikes and demonstrations from November through March in an effort to force the government to break El Alto’s contract for water service with privately-owned Aguas del Illimani, a subsidiary of French giant Suez. This second “water war”—the first took place in April 2000 and succeeded in overturning water privatization in Cochabamba—happened to coincide with the debate in Congress over revision of the contracts that had privatized Bolivia’s oil and natural gas in the mid–1990s.
The combination of issues proved explosive. By mid–March, road blockades had spread not only across El Alto but also to Cochabamba, the Chapare, and Santa Cruz. Bus drivers in Santa Cruz, for example, snarled traffic in a key district to protest rising fuel prices. A report filed by journalist Luis A. Gómez stated that the drivers “were brutally repressed by the police, and 80 drivers [landed] in jail.… Eight-hundred drivers, carrying torches and banners, surrounded the main Santa Cruz police barracks and demanded freedom for their comrades.”

The police violence in Santa Cruz symbolized an increasing effort on the government’s part to criminalize the social movements. In his first resignation speech, Mesa demonized the movements’ leaders and called for the middle class to mobilize in the name of “peace and democracy.” More than 100,000 answered his call in La Paz, where they waved white kerchiefs and shouted pro-Mesa slogans. In Cochabamba, the right-wing crowd turned hostile. Mesa supporters assaulted groups of students and unemployed workers, whose possessions were seized and burned.

As happened under the administration of deposed President Gonzalo Sánchez de Lozada during the October 2003 gas war, the Mesa government is seeking to push through legislation that would make illegal the setting up of road blockades. The army and police would have the authority to remove the blockades by force and to imprison protesters—even if demonstrations remained peaceable.

The fight over gas

Mesa at one point appeared to have acquiesced to El Alto’s demands for the ouster of Aguas del Illimani. Later he vacillated, saying that the Bolivian government neither could nor should break the water contract, and that he would not pressure Aguas del Illimani into leaving. Social unrest then welled up on March 2 with a call for mobilizations and a “civic strike” explicitly based on an alliance between urban and rural social movements. The most common view today is that parent company Suez wants to pull out of El Alto anyway for lack of profits, but the exact status of Aguas del Illimani still remains under a cloud.

The state of the ongoing gas war is demonstrably clearer, though it likely will continue to lack a definitive resolution for sometime. The social movements, the unions, and the left political parties have united in defending the October 2003 gas war’s demand that the transnationals pay 50 percent royalties on natural gas exports. Under existing contracts, foreign companies pay only 18 percent. Gas protesters, moreover, have called for the nationalization of Bolivian gas.
Mesa has said that he will not raise the rate on royalties because the rate is contractually sealed, but he did offer to raise the tax rate for oil and gas transnationals to 32 percent, thus giving the appearance of a total of 50 percent (18 plus 32) recovery for the Bolivian treasury. Yet Mesa’s plan presents a fraudulent picture. First, a chunk of the taxes in the 32 percent package are already on the books and so would not represent any new income for Bolivians. Second, all of the taxes comprising the 32 percent are legally deductible under Mesa’s plan. Third, the tax rate is based on the volume of production, only some of Bolivia’s gas fields would be subject to pay the full 32 percent. And even in the phase-in period of eight or nine years there would be a reduction in the amount of taxes paid.
While the debate over 18 percent or 50 percent royalties has been important, of greater long-term significance has been the largely unaddressed issue of whether Bolivians and the Bolivian government will be able to establish the price of exported gas, or whether the transnationals will have the power to do it. The current contracts assign the establishment of gas prices to the transnationals.

Yet the ability to set gas prices opens a huge loophole for the gas companies. The same multinational corporations are generally both the producers and the buyers of natural gas. If the transnationals fix gas prices at a low rate in Bolivia, they can sell cheap to themselves or their subsidiary companies outside of Bolivia. Subsequently, they can hike prices again as the gas arrives at foreign destinations. This procedure results in fantastic profits for the oil companies and guts the funds that otherwise would be available for improving the lives of ordinary Bolivians.

That is why the unions and social movements have consistently demanded not only higher royalties but also the nationalization and industrialization of Bolivia’s oil and gas. Only if Bolivian gas is processed in Bolivia—and, hence, exported with value added—can Bolivians guarantee that they will fully benefit from the commercialization of their rich natural resources. The guardianship of such resources, movement leaders argue, should be placed in the hands of workers and citizens through forms of self-government.
On March 16, the lower house of the Bolivian Congress caught most people off-guard by enacting legislation that has served momentarily to displace the gas struggle into the parliamentary realm. The middle-class parties of the Bolivian House succeeded in passing a new Hydrocarbon Law based on the 18–32 percent option, but they went on to make it impossible for any of the 32 percent in taxes to be deducted, compensated, or credited in any way. In other words, they rejected the radical 50 percent option for royalties in favor of Mesa’s 18–32 percent formula. But they shut the loopholes in Mesa’s proposal in favor of their own “third option.”

The most sensational development, however, came in early April when the Bolivian Supreme Court declared the gas privatizations of the 1990s to be null and void on the grounds that they are unconstitutional. Neither Sánchez de Lozada nor Jorge Quiroga, both former presidents from the late 1990s and early 2000s, submitted the privatization contracts to Congress for ratification, as the Bolivian Constitution requires. The Court’s ruling affects fully privatized enterprises as well as the “shared risks” (public/private) companies run in conjunction with the Bolivian state oil company. Hence, petroleum reserves and facilities in Bolivia have apparently reverted to state property.

As the ISR went to press, the oil and gas transnationals were frantically filing lawsuits against the Bolivian state. Meanwhile, Congress was telling the transnationals that they have four months to bring their operations in line with the provisions of the new hydrocarbon law.

Balance of forces

One of the political effects of the struggles of the last few months has been the rebirth of the center-right “mega-coalition” that formed the power base of Sánchez de Lozada prior to his downfall in October 2003. Mesa openly conjured the mega-coalition in March when he threatened to resign; he used its substantial turnout at rallies to claim that the “silent majority” stands solidly at his side. The political parties comprising the mega-coalition went on to save Mesa from actually having to resign. These nationalist-oriented capitalists want to see more gas profits flow toward modernizing Bolivia instead of ending up as office furniture in Paris or San Francisco.

At the same time, they do not want to hit the transnationals so hard that foreign investment withdraws, and they certainly oppose turning over Bolivia’s oil and natural gas to committees of workers and citizens. Thus they ally with those sectors of the Bolivian economy that are fully integrated into global capitalism when necessary to stave off revolt, but they pursue more narrowly nationalist interests whenever they can.
Mesa has always sought to maintain the 18 percent royalties and the inviolability of Bolivian contracts with the transnationals. This nominally puts him in alliance with Bolivia’s local oil interests, who want to safeguard the original oil contracts against the kind of nationalization and increased royalties pursued by the social movements. But Bolivia’s domestic oil barons, especially those in the state of Santa Cruz, have begun to demand autonomy, and even secession, in the face of the possibility that Mesa may prove incapable of defending the original oil contracts. Throughout the winter and spring, Mesa has felt ensnared between the fears of the Santa Cruz separatists, on the one hand, and the demands of the social movements, on the other hand.
The basic challenge to Mesa has been to keep Bolivia in line with the imperial interests of the transnationals. These interests have made themselves heard in ways impossible to ignore.

Prior to the recent Supreme Court rulings, but fully within the context of the struggles taking place this year, the U.S. embassy and the International Monetary Fund issued stern statements about the consequences of changing the gas privatization contracts. Presidents Lula of Brazil and Néstor Kirchner of Argentina joined President George Bush of the U.S. in declaring support for Mesa’s 18–32 percent plan—a neoliberal plan through and through. Secretary of State Condoleezza Rice publicly voiced the Bush administration’s consternation over the rise in the following of opposition leader Evo Morales and his Movement Toward Socialism party (MAS). Morales and the MAS have been the most outspoken defenders of the 50 percent option on royalties.

The MAS has indeed taken the lead in the gas protests of 2005. In part this is because Morales argued that a “yes” vote in Mesa’s July 2004 referendum on commercializing Bolivian natural gas meant that the transnationals would pay 50 percent royalties. Most of the Left abstained from the referendum, however, or wrote “nationalization” across their ballots, because they considered the referendum to be a trap.
In fact, the word nationalization, and the possibility of a truly democratic recovery of Bolivia’s natural patrimony, did not appear on the ballot. That the referendum was designed as a trap is now obvious; Mesa claims that nothing in the referendum suggests that royalties have to be increased from 18 percent to 50 percent. But Morales feels he must make good on the interpretation he used to justify his support of the neoliberal referendum. And the only way he can do so today is by leading the fight for 50 percent royalties.

Mesa’s gas referendum does not represent the first time in recent events that Morales and the MAS have sided with neoliberalism against sections of the radical Left. During the gas war of October 2003, Morales supported Mesa’s constitutional succession, even though Morales himself could have come to power as part of a coalition in open defiance of neoliberalism and U.S. imperialism. Morales signed off on Mesa’s succession to power knowing full well that Mesa would merely continue Sánchez de Lozada’s neoliberal policies.

Morales’s tactics in October 2003 grew out of his long-term electoral strategy. Betting on his ability to win the presidency in elections scheduled for 2007, Morales did not wish to risk a dangerous confrontation with U.S. imperialism by achieving power through extra-parliamentary means. Thus, throughout 2004, the MAS made a priority of its electoral campaign and strongly discouraged popular direct action against the government. It even sided with Mesa on several key issues—most notably, the gas referendum—and effectively functioned as a sustaining pillar of the government.

Morales’s de facto support for Mesa’s government cost the MAS in the fall 2004 municipal elections. The international press, as well as the MAS’s own party press, spoke glowingly of a dramatic rise in the MAS’s popularity, since it came out ahead as the most voted for party and advanced its totals from the 2000 municipal elections.
In truth, however, the 2004 results constituted a wake-up call for the MAS. In the 2002 presidential election, Morales polled 22 percent of the national vote. In the 2004 municipals, the MAS received only 11 percent nationwide. As historian Forrest Hylton commented at the time, the MAS’s celebratory assessment of its most recent electoral test “reproduced one of the worst tendencies of the old sectarian Left: spinning setbacks to make them look like advances.”

The MAS’s decline between 2002 and 2004 is directly attributable to an electoral strategy that required it to abandon direct action and to play ball with Mesa’s neoliberal government. At some level, this realization appears to have made its impact felt within the MAS and has contributed to Morales’s decision to rejoin the front lines of struggle against the transnationals. The future of the MAS’s renewed militancy, however, should be viewed as remaining up in the air, since the party’s conservative wing accuses Morales of allowing himself to be held hostage to its radical wing at the present time.

The MAS’s conservative wing has also denounced Morales’s renewed alliance with Jaime Solares of the Bolivian Workers Confederation, Felipe Quispe of the Bolivian Peasant Workers Confederation, and Oscar Olivera of the Coalition for the Defense and Recovery of Natural Gas. Characterized as “political cadavers” by MAS conservatives, these three (along with Morales himself) comprised the original People’s General Staff (EMP), which formed during the “coca war” of January 2003. New leaders have been added, such as Abel Mamani of the FEJUVE and El Alto’s councilman and labor leader Roberto de la Cruz. The purpose of the EMP is to serve as a vehicle of unity in action among the different organizations and movements in struggle.

This rediscovered unity among the social movements, unions, and progressive political parties is both welcome and long overdue. The hope is that it will last beyond the phase of parliamentary and judicial debate that has momentarily corralled the struggle over natural gas. It is unlikely that any institutional outcome in the present contest of legalities will satisfy the demand of Bolivian workers for the public ownership and self-management of Bolivia’s natural gas. As Oscar Olivera has written,

If we do not want the bosses and politicians to steal our children’s future, we should help transform the suffering and weariness that has broken out all around us into a force for decision, for coming together, and for mobilization.... There exists a predisposition to struggle. What we need to do is to create networks of groups that build social unity, in which individual anger and disillusionment can be converted into collective mobilization, democratic discussion and decision-making, and collective action.