Sat, Jan 07, 2006 - Page 7 News List

EU calls for more cautious approach to Bolivian economy

AFP , BRUSSELS

EU foreign policy chief Javier Solana urged Bolivian President-elect Evo Morales on Thursday to ensure a secure environment for investment in his country, after the latter's vow to nationalize key sectors caused concern among foreign investors.

"Legal security is fundamental," Solana told reporters after talks with Morales, which he described as positive. "This is a country in need of money from abroad, foreign investment."

Morales arrived in Brussels from Madrid, where he sought to allay fears that Spain's substantial economic interests in his country were secure, despite his vow to ensure state control over the crucial energy sector.

"He guaranteed that Spanish companies could continue to operate [in Bolivia] but it should be within the framework of a new legal contract that enabled the state to have a stake in [energy] production and control over it," explained Willy Meyer, top foreign affairs official in Spain's small United Left party, after the Communist-Green alliance met Morales on Thursday morning.

Spain's government and businesses -- particularly energy companies Repsol-YFP, Iberdrola and Red Electrica Espana -- have voiced concerns about Morales' intention to nationalize Bolivia's substantial energy resources.

The giant Repsol-YPF controls a quarter of Bolivia's gas reserves which, at 1.55 billion cubic meters, are the second largest in Latin America after Venezuela. France's Total and British Gas are also major investors.

Morales, who takes office as Bolivia's first indigenous president on Jan. 22, assured Western investors on Thursday they had "nothing to fear" so long as they paid their taxes and respected Bolivian law. Repsol-YPF, he said, was not one of the "bandits," Spanish news agency Europa Press reported.

"Yes, we will nationalize. But that does not mean confiscate, expropriate or expel," Morales told the press on Wednesday after meeting Prime Minister Jose Luis Rodriguez Zapatero.

He acknowledged Bolivia needed Western investors. Europe, and Spain in particular, had "a responsibility towards Latin America and for that reason should invest there," he said.

Despite its substantial gas reserves, Bolivia remains the poorest country in Latin America. Morales announced on Thursday he planned to use energy sector revenue to reduce widespread poverty and he thanked fellow Socialist Zapatero for pledging to forgive much of Bolivia's US$120 million debt to Madrid.

Later on Thursday Morales held talks at The Hague with Dutch Foreign Minister Ben Bot, who promised support for Bolivia's development efforts, particularly in technical assistance to exploit gas reserves.

"We believe that's very important that the state should be the owner of the natural reserves, but we need partners ... We believe in dialogue and to eradicate poverty we need investments," Morales said.

Morales' latest visits followed meetings in Venezuela and Cuba.

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