[stop-imf] Stiglitz and IMF on Bolivia

[robert weissman]

From: =09Patrick Bond <pbond@mail.ngo.za>







(Huge thanks for translation to e-debater Yoshie whose MRZine continues
to be a must-read: http://mrzine.monthlyreview.org/rojas200506.html)

Stiglitz: Those Who Must Be Compensated Are the Bolivians, Not the Companie=
s
by Rosa Rojas

IMF: Far-reaching Consequences after Nationalization in Bolivia

    * The manner in which Bolivia negotiates with the affected companies
      will be the key factor, according to the financial organization.
      The failure of the neoliberal model imposed by the US is evident,
      maintains the Nobel laureate in economics.


Image of the gas plant San Alberto, which the Brazilian Petrobras
operated, on the First of May, the day when the president of Bolivia,
Evo Morales, announced the nationalization of hydrocarbons.  Photo AP.

La Paz, 18 of May.  Joseph Stiglitz, a 2001 winner of the Nobel Prize in
economics, today described the recent nationalization of hydrocarbons in
Bolivia as a process of "return of a property" that already belonged to
the Bolivian government and considered it "necessary" that Bolivia
should receive a "just compensation" for its natural resources.

In contrast, from Washington, the International Monetary Fund (the IMF)
warned the "far-reaching economic consequences" after the decision by
Bolivian President Evo Morales, from whom it demanded compensations, and
said that what happened could discourage foreign investors, according to
news agencies.

"The decision of the Bolivian government to nationalize the hydrocarbon
sector has ample potential economic consequences," emphasized the
spokesman of the international financial organization, Mahsood Ahmed.
This --  combined with the manner in which Bolivia negotiates with the
affected companies -- will be a key factor, said Ahmed

"I understand that, depending on the ways in which the Bolivian
government puts this decision in practice, it could have an impact on
the availability of private local and foreign capitals for investment in
that important sector of the economy of Bolivia," the IMF official
elaborated in his first meeting with the press.

The IMF, which sent a mission of experts to Bolivia to examine the
evolution of its economy, invites the government, according to Ahmed, to
open negotiations in the next six months with the foreign companies and,
in certain cases, with the foreign governments, on the modalities of
nationalization in practice.

Those conversations would have to turn, according to the IMF spokesman,
on the compensations for the nationalized goods, the nature of new
contracts, and a possible rise in the prices of export towards Brazil
and Argentina, the main partners of Bolivia.  "For us, it is important
that those negotiations lead to a mutual agreement," concluded Ahmed.

But US economist and former Vice President of the World Bank Joseph
Stiglitz emphasized that the failure of the neoliberal model imposed by
the Washington Consensus that set out to reduce the role of the State in
national economies to the minimum is evident, and underscored that
Bolivia, once one of the best students of the neoliberal model, "felt
all the pains (of its application) but has experienced no gains -- it's
clear that it must have a change in its economic model."

In this context, Stiglitz did not wish to characterize the new energy
policy of Evo Morales as nationalization, but would call it the
"recovery" of Bolivia's resources, or the "return to Bolivia of a
property that already was hers."  Further, he indicated that Bolivia
should receive a just value for the exploitation of its natural resources.

"When a person was robbed of a painting and then it is given back to
him, we don't call it renationalization, but return of a property that
was his to begin with," explained Stiglitz.  In the same way, he
questioned the existing contracts between the State of Bolivia and petro
multinationals, highlighting that "in reality. there was no sale, since
it was not made in accordance with laws or approval of the Congress --
where there is no property to be nationalized, there can't be
nationalization."

That means that it was necessary to change the previous conditions "one
way or another," added Stiglitz.

However, Stiglitz said that there are other questions on the matter: the
first is if the investors receive a compensation appropriate for their
investments, "and the government has said that, yes, there will be one";
and the second is that the value that Bolivia should receive for the
exploitation of its natural resources is accumulating in favor of the
Bolivian people, "and the government has declared that's the way it will
be."

Former World Bank Vice President turned one of the major critics of the
international financial organizations, Stiglitz mentioned that the
Bolivian government needs to carry out programs for the development of
hydrocarbons, minerals, and gas, as well as taking care of investment
and promotion of education and health.

Regarding free trade agreements, Stiglitz commented that such treaties
"are not good" because they are going to undermine the productive
structure of countries; "they are not right for developing countries --
it is not a negotiation, it is rather an imposition."

These treaties can be very costly for national sovereignty.  In the case
of Mexico, noted Stiglitz, the economic unevenness between this country
and the United States became greater after the signing of the Free Trade
Agreement.  He considered it necessary to take the cost-benefit equation
into account.  Not having a free trade agreement is better than having a
poorly designed one, maintained the Nobel laureate.

Last night, the US economist and Columbia Business School professor met
with President Evo Morales and various officials, and today he received
honorary doctorates from the Mayor de San Andr=E9s (UMSA) and P=FAblica de
El Alto (UPEA) Universities.

Meanwhile, Spain designated Bernardino Le=F3n, Secretary of State for
Foreign and Ibero-American Affairs, this Thursday as its negotiator with
the government of Bolivia; he will work with Repsol-YPF, a company
affected by the nationalization of hydrocarbons in the Andean country,
from which the Spanish government again demanded legal safeguards.

In Brasilia, Marco Aurelio Garc=EDa, the Brazilian President's advisor on
international affairs, affirmed that "the climate of confidence" between
Brazil and Bolivia "was reestablished" after the impact caused by the
nationalization of hydrocarbons that affected the Brazilian state
enterprise Petrobras.