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Thesis & Antithesis

A critical perspective on energy, international politics & current affairs

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Location: Washington, D.C.

greekdefaultwatch@gmail.com Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.

01 May 2006

Bolivia nationalizes gas industry

There is much to say about Bolivia’s decision to nationalize its natural gas industry (link). That big oil and gas companies are regarded as predators and abusive of the national interest is an idea that has resonance even in America, even if the reaction is for more political oversight, not nationalization. Bolivia’s story reminds us that hydrocarbons are both a symbol of sovereignty and an instrument for its exercise: political legitimacy comes from targeting foreign companies, credibility from a successful attack.

The more subtle message, however, is that a large group of people, under appropriate leadership, can delude itself so easily into thinking nationalization is a good idea. Witness Kuwait and Iran, two countries which nationalized their oil industries decades ago, struggle to find terms to re-invite foreign capital. Mexico, too, suffers from the same problem: the political impossibility of allowing foreign ownership is contrasted sharply with the attention and expertise that the oil wells require so desperately.

Evo Morales may celebrate a political victory today. He rejoices, no doubt, that he joins his friends from Caracas and Havana to form a regional alternative to American hegemony (link). His shortsightedness in signing a trade deal with his two neighbors is just that—shortsighted. But the energy decision he sealed today will linger on, and it will be long before any politician will be able to pick up the pieces and revitalize a gas industry that is certain to make less gas and deliver less money to those who Morales pretends to defend.

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