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Resource rich Bolivia turns clock back

William Keegan

Bolivia has nationalised its domestic energy resources in the face of current trends in favour of private enterprise. A shrewd move, perhaps, at a time when owners of natural resources hold many of the best cards.

WOULD YOU believe it? Nationalisation is back in the news. Not in Britain, where Tony Blair's Labour Government (yes, he is still there) has been even more devoted to the worship of private enterprise than the United Kingdom's radical right-wing Conservative administrations of the 1980s, but in Bolivia.

President Evo Morales in La Paz has shaken not only his neighbours but, it seems, most of the world by his order (appropriately enough on May Day) to the Bolivian army to secure the assets of private energy companies: "The time has come," he said "the awaited day, a historic day on which Bolivia takes control of our natural resources."

There is a long history of concern in Bolivia about its natural resources. As The New York Times notes this week "since well before the past century began, Bolivia has fought repeatedly with its neighbours over the riches on and under its soil. It has lost every time."

For economists and politicians around the world, Mr. Morales' actions go not only against the grain, but also against everything they thought they knew about the course of economics and politics in recent decades. The Governments of Margaret Thatcher in the U.K. in the 1980s prided themselves in introducing the concept of "privatisation" to the rest of the world. Not only did this begin a trend in "denationalisation," but the very neologism seemed designed to banish the very thought of old fashioned, inefficient nationalisation from people's minds.

This, you understand, from the very country, Britain, that had made a big thing of nationalising what were then described as the "commanding heights" of the nation's economy after the election of the Labour government led by Clement Atlee in 1945.

Notwithstanding Mr. Blair's 1990s burial of the old Clause Four of the Labour Party's Constitution (committing the Party to the nationalisation of the means of production, distribution and exchange), the Atlee government is looked back on nostalgically these days. Yet at the time its nationalisation programme, of coal, steel, and the railways, was highly controversial. However, terms of compensation were agreed with shareholders and the country lived reasonably happily with nationalised industries for decades, without being ostracised.

The background to the U.K. Labour's nationalisation programme was the strong belief that "private enterprise" in the relevant industries had served employees and the nation badly during the inter-war years.

Fashions changed and disillusionment set in — a disillusionment which was no more beautifully captured with regard to the coal industry than in a musical called Close the Coal House Door. This was a satire on the various panaceas for the industry offered by government policy, including nationalisation, regionalisation, and rationalisation (the message comes over best, as in the original stage production, if you imagine these words being spat out contemptuously by an English miner in a strong regional accent).

Back in La Paz, President Morales has claimed in triumphant populist fashion: "The looting by foreign companies has ended."

Looting, I do not know, but hard fought negotiations between governments and foreign (or domestically-owned) energy corporations have been the stuff of economic history since the end of the 19th century. Bolivia's feelings of "exploitation" go back many years.

What is quite clear is that Mr. Morales has made his move at a time when the power is very much on the side of the owners of natural resources. It may be recalled how shocked the oil-consuming developed nations of the world were when OPEC first raised oil prices in 1973-74. Price rises, industrialised nations quickly realised, they could do very little about.

And, whatever theoretical and practical objections people may have to nationalisation, post-Soviet Russia and America's Enron have not exactly enhanced the reputation of private enterprise. —

© Guardian Newspapers Limited 2006

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