Bolivia to sell gas to Chile

June 20, 2007October 15, 2007 COHA

Oil and Gas Features
By Carmen J. Gentile
Jun 20, 2007, 17:02 GMT

MIAMI, FL, United States (UPI) — In a surprise move, Bolivian President Evo Morales said his government was considering selling natural gas to Chile.

The decision is surprising after more than a century of tension between the two countries stemming from Bolivia losing its coast to Chile in a 19th century war.

Tensions run deep. In 2003 the mention of selling gas to Chile was reason enough to force President Gonzalo Sanchez de Lozada from office and inspire widespread violence that left dozens dead. Morales, a leftist and Bolivia`s first indigenous leader in modern times, apparently felt no such fear. Having nationalized the country`s gas sector last year, he now apparently feels confident enough to suggest filling Bolivian state coffers with Chilean pesos.

The notion of gas sales to Santiago is part of a 13-point plan for the two nations that still do not have full diplomatic relations.

In 2003 Sanchez de Lozada`s departure opened the door for his vice president, Jose Mesa, to assume the presidency. Violence first erupted when Goni, as Sanchez de Lozada was known, proposed opening the Bolivian gas market to the United States and Mexico by piping it through neighboring Chile.

During the protests, Goni attempted to pull Bolivia back from the brink by calling for a national referendum on the gas issue. The move proved too little, too late, as it was rejected by the opposition and former allies, who quickly abandoned the president.

By then, tens of thousands of rural farmers and blue-collar Bolivians began pouring into La Paz, exploding sticks of dynamite and blocking the streets with cobblestones and rubbish.

Goni assured the nation the gas deal would be a boon to the country, but Bolivian protesters were skeptical, believing rampant corruption would prevent any benefits from trickling down. In 2004 Bolivians voted in a national referendum to forbid the sale of their gas to Chile.

The gas issue was eventually the undoing of Mesa as well. In June 2005 the Bolivian leader faced a round of violent protests over how the gas revenue was being spent. Mesa eventually stepped down, opening the door for Morales` eventual victory and decision to nationalize the gas industry.

Political differences and age-old grudges like the Bolivia-Chile feud are keeping both nations and Latin America from fulfilling its energy potential, says a report from the Council of the Americas released last summer.

However, overcoming differences and historical gripes is not impossible, council officials said in an interview with United Press International.

‘They (differences) can be overcome, but its going to take a strong and focused effort to do so,’ Eric Farnsworth, vice president of the Council of Americas, told UPI at the time.

Others remain skeptical as to whether the Latin American neighbors can ever put aside their differences in the name of energy needs and political common sense.

Bolivia`s historical animosity toward Chile, according to Larry Birns, director of the Council on Hemispheric Relations, ‘is of course part of the eternal flame of Bolivian foreign policy.’

‘If you stray too far from the anti-Chile sentiment … your political prospects for the future are not going to be too great,’ Birns told UPI.

Whether Morales can retain his political base — not to mention his office — while courting Chile as a potential gas customer should make for interesting regional theater in the weeks and months to come.

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