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The Bolivian Gas War was a Social Conflict in Bolivia centering around the exploitation of the country's vast Natural Gas reserves. The expression can be extended to refer to the general conflict in Bolivia over the exploitation of gas resources, thus including the 2005 protests and the election of Evo Morales as president. Prior to these protests, Bolivia had seen a series of similar earlier protests, during the Cochabamba Protests Of 2000 , which were against the privatization of the municipal water supply. The conflict had its roots in grievances over the government's economic Coca Eradication policies and corruption as well as violent military responses against strikes and came to a head in October 2003 . Strikes and road blocks mounted by Indigenous and Labor Groups brought the country to a standstill. Violent suppression by the Bolivian armed forces left some 70 people dead in October 2003, mostly inhabitants of El Alto , located on the '' Altiplano '' above of the capital city La Paz . The governing coalition disintegrated forcing the president said to the crowd that the government's energy-related revenue will jump to $780 million next year, expanding nearly sixfold from 2002. 1 BACKGROUND The second-largest gas reserves of South America . "The gas is our own by right, to recover it is our duty" ( Indymedia Copyleft ) ]] At issue is Bolivia's large natural gas reserves and the prospect for their future sale and use. The Bolivian gas reserves are the second-largest in South America , after Venezuela , and were discovered in the mid-1990s. They are mainly located in the south-eastern Tarija Department , which contains 80% of gas and petrol reserves. Another 10% is located within the Santa Cruz Department , according to '' Le Monde ''. After further exploration between 1996 and 2002 the estimated size of the gas reserves was calculated to be 12.5 times larger, passing from 4.24 TCF (Trillion Cubic Feet ) to 52.3 TCF. With the declining importance of Tin mines, those reserves accounted for the majority of foreign investment in Bolivia. Brazil and Argentina pay US$2 per thousand Cubic Meter of gas, which costs between $12 to $15 in California 2 . In 1994 a contract with Brazil was passed, two years before the 1996 's Privatization of the 70-year-old, state-owned ''Yacimientos Petroliferos Fiscales de Bolivia'' (YPFB). The construction of the Bolivia-Brazil gas pipeline cost US$ 2.2 billion. A Consortium called Pacific LNG was formed to exploit the newly discovered reserves. The consortium comprised the British companies BG Group and BP , and Spain 's Repsol YPF . Repsol is one of three companies that dominate the gas sector in Bolivia. The other two are Petrobras and Total . A plan costing US$6 billion was drawn up to build a pipeline to the Pacific coast, where the gas would be processed and Liquefied before being shipped to Mexico and the United States ('' Baja California '' and U.S. State California ), through a Chilean port, for example Iquique . The 2003 Lozada deal was heavily opposed by Bolivian society, in part because of Nationalism (Bolivia still feel resentment after the territorial losses of the War Of The Pacific in the late 19th century, which deprived it of the Litoral Province and hence of an access to the sea). Government ministers hoped to use the gas profits to bolster the sagging Bolivian economy and claimed the money would be invested exclusively in health and education. Opponents argued that under the current law, the exportation of the gas as a raw Material would give Bolivia only 18% of the future profits, or US$40 million to US$70 million per year. They further argued that exporting the gas so cheaply would be the latest case of foreign exploitation of Bolivia's natural resources, starting with Silver and Gold from the 17th century. They demanded that a plant be built in Bolivia to process the gas and that domestic consumption had to be met before export. As ''Le Monde'' puts it, "two reasons plead for the industrial exploitation of the gas, which the multinational companies now have the capacities of doing. The first is related to the necessity of satisfying the Bolivians' energy needs. The second demonstrates the interest of exporting a more profitable product, rather than selling raw Material ". According to the French newspaper, only La Paz, El Alto, Sucre , Potosi , Camiri and Santa Cruz are now connected to the gas network; making an interior network which would aprovisions all Bolivians would cost $1.5 billion, notwithstanding a central gas pipeline to link the various regions together. According to Carlos Miranda, an independent expert quoted by ''Le Monde'', the best industrialisation project is the Petrochemical complex proposed by the Brazilian Braskem firm, which would create 40 000 direct or indirect jobs and cost $1.4 billion. This figure is equivalent to the amount so far invested by Repsol, Total and Petrobras . Indigenous communities - Graffiti says "The gas is not for sell, carajo!]] Bolivia, like much of . European descendants tend to monopolize political and economic power and in fact the republican institutions are drawn along the lines of European schools of thought with little or no adjudment to the indigenous tradition. This makes it much harder for the indigenous to ingegrate into society and to achieve personal success. Since the late 1990s , the indigenous communities have become radicalized throughout the Andes pressing for political reform in Peru , Ecuador and Bolivia, loosely coordinated in the Pachacuti movement. The Movement Toward Socialism (MAS), is perhaps the strongest political expression of this movement in Bolivia, coordinating a wide range of community-based organizations mostly reflecting Aymara political aspirations. Santa Cruz autonomy movement People of primarily mestizo descent (mix of european and several native tribes the largest of which are the Guaraní ) from the wealthier eastern Department Of Santa Cruz have recently been mobilizing in favor of autonomy from the central power. Important issues are opposition to the seizure of resources though nationalization, the confiscation of land from local control by outside ethnic groups (mainly the Aymara-Quechua), and greater regional autonomy for their department. These demands are mainly supported by local co-ops and by business organizations such as cattle farmers and the agribusiness sector. Because of this, there has been some recent fears about tensions between the predominantly indigenous highlands of the country and the more European eastern part of the country. The creation of a US military airport at Mariscal Estigarribia , in Paraguay located close to the borders of Bolivia and Brazil, and the signature of a military cooperation agreement with Asuncion lifted some concerns of possible intervention in the case of a severe crisis 3 . VIA CHILE OR PERU The dispute arose in early 2002, when the administration of President Jorge Quiroga proposed building the pipeline through neighboring Chile to the port of Mejillones , the most direct route to the Pacific Ocean . However, antagonism towards Chile runs deep in Bolivia because of the loss of Bolivia's Pacific coastline to Chile in the War Of The Pacific (1879-1884). Bolivians began campaigning against the Chilean option, arguing instead that the pipeline should be routed north through the Peruvian port of Ilo , 260 km further from the gas fields than Mejillones, or, better yet, first industrialised in Bolivia. According to Chilean estimates, the Mejillones option would be $600 million cheaper. Peru, however, claimed the difference in cost would be no more than $300 million. Bolivian proponents of the Peruvian option say it would also benefit the economy of the northern region of Bolivia through which the pipeline would pass. Supporters of the Chile pipeline argued that US financiers would be unlikely to develop processing facilities within Bolivia. Meanwhile, the Peruvian government, eager to promote territorial and economic integration, offered Bolivia a special economic zone for 99 years for exporting the gas at Ilo, the right of free passage, and the concession of a 10 km² area, including a port, that would be exclusively under Bolivian administration. President Jorge Quiroga postponed the decision shortly before leaving office in July 2002 and left this highly contentious issue to his successor. It was thought Quiroga did not want to jeopardize his chances of re-election as president in the 2007 elections. After winning the 2002 presidential election Gonzalo Sánchez de Lozada expressed his preference for the Mejillones option but made no "official" decision. However, the Gas War led to his resignation in October 2003. His successor, Carlos Mesa , also resigned following the 2005 Hydrocarbons Law. Evo Morales was elected president in 2005 and is strongly opposed to having a foreign consortium export Bolivia's natural gas without processing it before. He argued it should be used domestically to help Bolivia, the poorest country in South America. ESCALATION . The social conflict escalated in September 2003 with protests and road blockages paralyzing large parts of the country, leading to increasingly violent confrontations with the Bolivian armed forces. The unrest was spearheaded by Bolivia's indigenous majority, who accused Sánchez de Lozada of pandering to the US government's " War On Drugs " and blamed him for failing to improve living standards in Bolivia. On September 8 , 650 Aymara s started a Hunger Strike to protest against the state detention of a villager. The man detained was one of the head of the village, and was emprisonned for having sentenced to the Death Penalty two young men in a "community justice" trial. On September 19 , the National Coordination for the Defense of Gas mobilized 30,000 people in Cochabamba and 50,000 in La Paz to demonstrate against the pipeline. The following day six Aymara villagers, including an eight year-old girl, were killed in a confrontation in the town of Warisata . Government forces used planes and helicopters to circumvent the strikers and evacuate several hundred Bolivian tourists in Sorata who had been stranded by the road blockades for five days (the Bolivian tourists were there for religious festivities). In response to the shootings, Bolivia's Labor Union (COB) called a general strike on September 29 that paralyzed the country with road closures. Union leaders insisted they would continue until the government backed down on its decision. Poorly armed Aymara community militias drove the army and police out of Warisata and the towns of Sorata and Achacachi (they were only equipped of traditional Aymara Sling-shots and guns from the 1952 Bolivian National Revolution . Eugenio Rojas, leader of the regional strike committee, declared that if the government refused to negotiate in Warisata, then the insurgent Aymara communities would surround La Paz and cut it off from the rest of the country — a tactic employed in the Túpaj Katari uprising of 1781. Felipe Quispe , leader of the Indigenous Pachakuti Movement (MIP), stated that he would not participate in dialogue with the government until the military withdrew from blockaded areas. The government refused to negotiate with Quispe, claiming that he did not have the authority to represent the '' Campesino '' movement. As the protests continued, protesters in El Alto, a sprawling indigenous city of 750,000 people on the periphery of La Paz, proceeded to block key access routes to the capital causing severe fuel and food shortages. They also demanded the resignation of Sánchez de Lozada and his ministers, Yerko Kukoc, Minister of Government, and Carlos Sánchez de Berzaín, Minister of Defense, who were held responsible for the Warisata massacre. Protesters also voiced their opposition to the Free Trade Area Of The Americas agreement that was at the time under negotiation by the U.S. and Latin America n countries (since the November 2005 Mar Del Plata Summit Of The Americas , it has been put on stand-by). MARTIAL LAW IN EL ALTO On October 12 the government imposed Martial Law in El Alto after sixteen people were shot by the police and several dozen wounded in violent clashes which erupted when a caravan of oil trucks escorted by police and soldiers deploying tanks and heavy-caliber machine guns tried to breach a barricade. On October 13 , the administration of Sánchez de Lozada suspended the gas project "until consultations have been conducted the Bolivian people ." However, Vice President Carlos Mesa deplored what he referred to as the "excessive force" used in El Alto (80 dead) and withdrew his support for Sánchez de Lozada. The Minister of Economic Development, Jaime Torres, of the MIR party, also resigned. The U.S. Department Of State issued a statement on October 13 declaring its support for Sánchez de Lozada, calling for "Bolivia's political leaders {Link without Title} publicly express their support for democratic and constitutional order. The international community and the United States will not tolerate any interruption of constitutional order and will not support any regime that results from undemocratic means." 4 . On October 18, Sánchez de Lozada's governing coalition was fatally weakened when the ''New Republic Force'' party withdrew its support. He was forced to resign and was replaced by his vice president, Carlos Mesa, a former journalist. The strikes and roadblocks were lifted. Mesa promised that no civilians would be killed by police or army forces during his presidency. Despite dramatic unrest during his time in office, he respected this promise. Among his first actions as president, Mesa promised a referendum on the gas issue and appointed several indigenous people to cabinet posts. On July 18 , 2004 , Mesa put the issue of gas nationalization to A Referendum . On May 6 , 2005, the Bolivian Congress passed a new law raising taxes from 18% to 32% on profits made by foreign companies on the extraction of oil and gas. Mesa failed to either sign or veto the law, so by law Senate President Hormando Vaca Diez was required to sign it into law on May 17 . Many protesters felt this law was inadequate and demanded full nationalization of the gas and oil industry. THE 2005 HYDROCARBONS LAW On May 6 2005 the long awaited Hydrocarbons Law was finally approved by the Bolivian Congress. On May 17 Mesa failed to either sign or veto the Bolivian congress’ controversial Hydrocarbons Law, thus constitutionally requiring Senate President Hormando Vaca Díez to sign the measure and put it into effect. The new law returned legal ownership to the state of all hydrocarbons and natural resources, maintained royalties at 18 percent, but increased taxes from 16 to 32 percent. It gave the government control of the commercialization of the resources and allowed for continuous government control with annual audits. It also ordered companies to consult with indigenous groups who live on land containing gas deposits. The law stated that the 76 contracts signed by foreign firms must be renegociated before 180 days. This has not yet been done. Protesters argued that the new law did not go far enough to protect the natural resources from exploitation by foreign corporations, demanding a complete Nationalization of the gas and process in Bolivia. Due to the uncertainty over renegociation of contracts, foreign firms have practically stopped investing in the gas sector . Foreign investment virtually came to a standstill in the second half of 2005. Shortages in supply - very similar to those observed in Argentina after the 2001 price-fixing - are deepening in diesel, LPG, and begin to be apparent in natural gas. The May-June social unrest affected the supply of hydrocarbons products to the internal market, principally LPG and natural gas to the occidental region. Brazil implemented a contingency plan - led by the Energy and Mines Minister - to mitigate any potential impact from gas export curtailment. Although the supply was never curtailed, the social unrest in Bolivia created a strong sensation that security of supply could not be guaranteed. Occasional social action has continued to affect the continuity of supply, especially valve-closing actions. CARLOS MESA'S JUNE 2005 RESIGNATION THE PROTESTS Over 80,000 people participated in the May 2005 protests. Tens of thousands of people each day walked from El Alto to the capital La Paz , where protesters effectively shut down the city, bringing transportation to a halt through strikes and blockades, and engaging in street battles with police. The protestors demanded the Nationalisation of the gas industry and reforms to give more power to the indigenous majority, who were mainly Aymara s from the impoverished highlands. They were pushed back by the police with Tear Gas and Rubber Bullet s, while many of the miners involved in the protests came armed with Dynamite . May 24 2005 More than 10,000 Aymara peasant farmers from the twenty highland provinces came down from '' El Alto '''s Ceja neighborhood into La Paz to protest. On May 31 2005 , residents of El Alto and the Aymara peasant farmers returned to La Paz. More than 50,000 people covered an area of nearly 100 square kilometers. The next day, the first regiment of the National Police decided, by consensus, not to repress the protests and were internally reprimanded by the government. On , while in El Alto protesters began to cut off gasoline to La Paz. Approximately half a million people mobilized in the streets of La Paz, on June 6 , and President Mesa subsequently offered his resignation. Riot police used tear gas as miners amongst the demonstrators traditionally set off dynamite in clashes near the presidential palace, while a strike brought traffic to a standstill. However, Congress failed to meet for several days owing to the "insecurity" of meeting as protests raged nearby. Many members of Congress found themselves unable to physically attend the sessions. Senate President Hormando Vaca Díez decided to move the sessions to Bolivia's alternate capital, Sucre , in an attempt to avoid the protesters. Radical farmers occupied oil wells owned by transnational companies, and blockaded border crossings. Mesa ordered the military to airlift food to La Paz, which remained totally blockaded. Vaca Diez and House of Delegates president, Mario Cossío , were the two next in the line of succession to become President. However, they were strongly disliked by the protesters, and each declared they would not accept succession to the Presidency, finally promoting Edwardo Rodriguez , Supreme Court Chief Justice, to the Presidency. Considered apolitical and hence trustworthy by most, his admistration is a temporary one until Elections can be held. Protesters quickly disbanded in many areas, and like many times in Bolivia's past, major political upheavals were taken as a normal part of the political process. Caretaker President Rodriguez proceeded to implement the Hydrocarbons Law. The new tax IDH has been levied from the companies that are paying 'under reserve'. A number of upstream gas companies have invoked Bilateral Investment Protection Treaties and entered the conciliation phase with the state of Bolivia. The treaties are a step towards a court hearing before the International Centre For Settlement Of Investment Disputes (ICSID), dependent of the World Bank , which could force Bolivia to pay indemnization to the companies. OTHER COUNTRIES The social conflicts of the last few years have paralyzed Bolivia's political life. The unpopularity of the neoliberal Washington Consensus , a set of economic strategies implemented by Gonzalo de Lozada's administration, set the stage for the 2006 election of president Evo Morales, the country's first indigenous president. In the meantime, South American countries are contemplating other ways to secure gas supplies. Chile is considering importing liquified gas from Indonesia or Australia. Another project aims at linking the Camisea gas reserves in Peru to Argentina, Brazil, Chile, Uruguay and Paraguay . Linking Pisco (south of Peru) to Tocopilla (north of Chile) with a 1200km pipeline would cost $2 billion. However, experts doubt the Camisea reserves are enough for all the Southern Cone countries. Another 8,000km gas pipeline has been proposed that would link Venezuela to Argentina via Brazil. Its cost is estimated between $8 and $12 billion. While Argentina and Chile are large consumers of gas (50 percent and 25 percent respectively), other South American countries are lot less dependent . NATIONALIZATION OF NATURAL GAS INDUSTRY As of on May 1st. Ordering the Military and engineers of YPFB , the state firm, to occupy and secure energy installations, he gave foreign companies a six month "transition period" to re-negotiate contracts, or face expulsion. Nevertheless, president Morales stated that the nationalization would not take the form of Expropriation s or Confiscation s. Vice President Alvaro Garcia said in La Paz's main plaza that the government's energy-related revenue will jump to $780 million next year, expanding nearly sixfold from 2002. Among the 53 installations affected by the measure are those of Brazil's Petrobras , one of Bolivia's largest investors, which controls 14% of the country's gas reserves 5 . Brazil's Energy Minister, Silas Rondeau , reacted by considering the move as "unfriendly" and contrary to previous understandings between his country and Bolivia. 6 Petrobras, Spain's Repsol YPF , UK gas and oil producer BG Group Plc and France's Total are the main gas companies present in the country. According to Reuters , "Bolivia's actions echo what Venezuelan President Hugo Chavez , a Morales ally, did in the world's fifth-largest oil exporter with forced contract migrations and retroactive tax hikes -- conditions that oil majors largely agreed to accept." YPFB will pay foreign companies for their services, offering about 50 percent of the value of production, although the decree indicated that companies at the country's two largest gas fields would get just 18 percent. THE PROTESTERS Population of El Alto El Alto is a large, but poor town of over 750,000 people, mostly of Aymara heritage. Alteños are said to the largest group involved in the 2005 protests, led by Abel Mamani . These residents played a pivotal role in the 2003 Bolivian Gas War and the Cochabamba Protests Of 2000 . They favor nationalization, oppose free-trade economics, and demand more political power to the indigenous people of Bolivia. Miners Miners from the Bolivian trade union '' Central Obrera Boliviana '' (COB) have also been very active in the recent protests. Recently they have been active against propositions to privatize pensions. They have been known for letting off very loud explosions of dynamite in the recent protests. Coca farmers Shortly after the law passed Evo Morales , an Aymara Indian and leader of the opposition party Movement Towards Socialism (MAS), took a moderate position calling the new law "middle ground". However, as the protests progressed, Morales has come out in favor of nationalization and new elections. Protesters in Cochabamba Oscar Olivera was a prominent leader in the 2001 protests in Cochabamba against the privatization of water in Bolivia and has also become a leading figure. Specifically the protesters in Cochabamba, Bolivia's fourth largest city, have cut off the main roads in the city and are calling for a new Constituent Assembly as well as nationalization. Indigenous and peasant groups in Santa Cruz Indians in the eastern lowland department of Santa Cruz have also become active in the recent disputes over nationalization of the gas and oil industry. The Indian groups are composed mainly of immigrants from the western part of the country. They are composed indigenous groups such as the Guaraní , Ayoreo , Chiquitano and the Guyarayos . They have been active in recent land disputes and the main organization representing this faction is known as the "Confederacion de pueblos indigenas de Bolivia" (CIDOB) and another smaller more radical group called the "Landless Peasant Movement" (MST) which is somewhat similar to the Landless Workers' Movement in Brazil. Currently in the recent upheaval Guaraní Indians from this group have taken oil fields run by Spain's Repsol YPF and the United Kingdom's BP and have forced them to stop production. Felipe Quispe and peasant farmers Felipe Quispe is a radical Aymara leader who wishes to return control of the country from what he sees as the "white elite" to the indigenous Aymaran people who make up the majority of the country's population. Therefore he is in favor of an independent "Aymaran state". Quispe is the leader of the Pachakutik Indigenous Movement which is a party who in the 2002 Bolivian elections won six seats in Congress and the secretary general of the United Peasants Union Of Bolivia (CSTUB). REFERENCES SEE ALSO EXTERNAL LINKS
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