Sat, May 27, 2006 - Page 7 News List

Venezuelan clout increasing in Bolivia


Oil-rich Venezuela's increasing influence in Bolivia was set to be sealed with a penstroke yesterday when their respective presidents Hugo Chavez and Evo Morales signed another set of accords, this time to secure Venezuela's role in Bolivia's recently nationalized energy industry.

The two leaders also will also create a joint mining company called Minesur and a fertilizer company called Fert-isur, and Venezuela is pledging more university scholarships, asphalt to pave Bolivian roads, credit for businesses and trees for reforestation.

But Bolivia's huge natural gas reserves are the real prize, and Morales clearly needs outside help. Negotiations with a half-dozen foreign energy firms have been slow going since Morales nationalized the industry earlier this month, sending in troops to guard their energy installations, and Bolivia's cash-strapped state energy company won't be able to extract and profit from this resource without major new investments.

Rich with petro-dollars and eager to expand Venezuela's economic reach throughout Latin America, Chavez has already pledged US$140 million in donations and loans to Bolivia. Venezuelans are developing a national identity card program for Bolivia and will pay for 109 rural radio stations.

"Like never before in history, a foreign country is here visiting, orchestrating and deciding on issues that belong to Bolivians," said Fernando Messmer, a former foreign minister and opposition congressman.

Now Chavez is pledging even more support, promising to make Venezuela's state-owned energy firm, PDVSA, a minority partner with Bolivia to explore for gas and certify Bolivia's reserves, as well as build a gas processing plant and three asphalt factories. They will also help run state-owned gas stations in a venture to be called Petroandina.

In exchange for all this largesse, Bolivia will send Venezuela soy beans, as well as pay some cash for diesel shipments and fertilizer.

The deal is so lopsided that critics suspect Chavez is seeking other advantages at the expense of Bolivia and other South American countries, using his largesse to exert influence over Morales and strengthen his role as a regional energy player. Chavez and Morales say that's nonsense, and that both countries will gain plenty.

But Bolivia has long been dependent on foreign aid, and the money always causes political repercussions.

The US, for example, remains Bolivia's largest donor, giving approximately US$150 million annually. But much of the money is tied to the war on drugs, which Morales has said unfairly targets poor coca leaf farmers and gives the US too much sway with Bolivia's military.

Chavez is more interested in Bolivia's gas. While Brazil's Petroleos Brasileiro SA, is Bolivia's largest investor, Petrobras has frozen its investments since the nationalization and now says it's seeking natural gas elsewhere.

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