Hands off our gas!

Observations on Latin America

After Uruguay, the surge of the left in Latin America may prove unstoppable - but not if the UK and US governments have anything to do with it. Uruguay has just elected a left-wing coalition, including socialists and communists. Now look at Bolivia, where the Congress is proposing a hydrocarbons law that would increase the royalties that multinationals pay on gas production. Good idea? Alas, the UK government, all too predictably, is among those lobbying fiercely against it.

The Bolivians know about how foreigners can steal their natural resources. Most know the story of Cerro Rico ("rich mountain"), which rises behind PotosI, the highest city in the world. It was once the world's richest silver mine. For more than two centuries after Bolivia was colonised in the 16th century, the silver was dug out and transported in huge quantities to Spain. Thousands of African slaves were brought to work in the mines. Altitude sickness and constant darkness caused most to die within months.

Over the following decades, they were largely replaced by local Amerindians. They also died in large numbers, mainly from poisoning by the highly toxic mercury that was used to process the silver. As many as nine million miners may have died in the course of the next two centuries. If those estimates are right, the silver mines made a major contribution to the Andean demographic collapse.

The silver reserves were exhausted by the end of the 19th century. Rubber and then tin emerged to sustain the economy, but each boom ended in calamitous bust.

At first, it seemed history would repeat itself with gas. After large reserves were found in the early 1990s, President Gonzalo Sanchez de Lozada, anxious to attract foreign investment, asked the multinationals to help draw up legislation. They gave themselves ownership of gas at the well-head and agreed to pay an 18 per cent royalty on profits - a very low level, particularly as the companies themselves could calculate their profits.

A year ago, this cosy arrangement began to unravel. Infuriated that the companies planned to export gas to the US through a Chilean port, hundreds of thousands of Bolivians took to the streets. They demanded that a state company should run the gas sector, and that the resource should promote local development.

Sanchez de Lozada sent in the army, and several dozen were killed. The president then met secretly with the top military chief and the US ambassador. The military man said the situation was spiralling out of control: he would not take the repressive action needed to restore law and order. The next day, the president resigned.

His vice-president, Carlos Mesa, took over and appointed Alvaro RIos as hydrocarbons minister, instructing him to draw up a gas bill more acceptable to Bolivia. RIos, a technocrat who had been outraged at the earlier legislation, said he wanted to "give Bolivia a better deal while retaining enough benefits for the multinationals to keep them in the country". They, after all, had the expertise.

The RIos bill creates a state company and increases royalties to 50 per cent; it is now being debated in Congress. The minister himself, however, has been replaced by a politician more skilled in wheeling and dealing. The demonstrations continue, causing some Congress members to introduce radical amendments, and thus adding to the multinationals' anger.

The battle is not really over gas, but over who calls the shots in Bolivia. And remarkably, it is the mass-based organisations, representing indigenous and peasant populations, which are setting the political agenda. Next year a constituent assembly will draw up a new constitution to incorporate them in Bolivia's political institutions. This is revolutionary change, yet it remains, so far, constitutional, dem-ocratic and largely non-violent.

For decades, Latin America has been criticised for its high levels of economic inequality and social exclusion. Now Bolivians are organising to change things. And our governments in the west cry foul.