Joseph Stiglitz: «Who owns Bolivia?»

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Morales’ actions are widely supported by Bolivians, who see the so-called privatizations (or “capitalizations”) under former President Gonzalo “Goni” Sanchez de Lozada as a rip-off: Bolivia received only 18% of the proceeds! Bolivians wonder why investments of some $3 billion should entitle foreign investors to 82% of the country’s vast gas reserves, now estimated to be worth $250 billion. While there has not yet been full disclosure of returns, or an audit of the true value of investments, it appears that investors would, at the old terms, have recouped all their money within just four years.

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Bolivians also ask why foreigners reap all the benefits of today’s high prices for oil and gas? It costs no more to extract oil or gas today than it did when prices were one-third of their current level. Yet, the foreign oil companies get 82% of the increase – in the case of oil, this would amount to a windfall for them of $32 a barrel or more. No wonder that Bolivians thought they were being cheated and demanded a new deal. On May 2, Morales simply reversed the percentages, pending renegotiation of the contracts: the companies operating in the two largest fields would get 18% of the production for themselves. As part of this new deal, Bolivia should also get a larger share when prices increase. (Bolivia may, of course, not want to bear the risk of a fall in the price, so it may strike a deal to transfer some of the downside risk to foreign companies, giving them in exchange more of the upside potential.)

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If the Bolivians do not get fair value for their country’s natural wealth, their prospects are bleak. Even if they do, they will need assistance, not only to extract their resources, but also to improve the health and education of all Bolivians – to ensure long-term economic growth and social welfare.

For now, the world should celebrate the fact that Bolivia has a democratically elected leader attempting to represent the interests of the poor people of his country. It is a historic moment.»

(Joseph Stiglitz; ler na íntegra.)