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BOLIVIA: Bolivia’s Morales rejects US domination

by Hal WeitzmanThe Financial Times
January 22nd, 2006

Evo Morales was sworn in on Sunday as Bolivia’s first indigenous president in a historic and emotional ceremony that set the tone for his new government.

In a long speech, Mr Morales warned the US not to try to dominate the region, promised to slash parliamentary salaries and stamp out corruption, and reaffirmed his commitment to nationalising Bolivia’s hydrocarbons sector.

He also pledged to change Bolivia’s economic model. “We have to end neo-liberalism,” he said. A central theme was the long struggle by the indigenous majority in Bolivia against discrimination: “We need to repair 500 years of history.”

Mr Morales reiterated the need to nationalise the gas sector, the second largest in the region. “All our natural resources need to be returned to the Bolivian people, in order for us to end poverty,” he said.

The president, who has rejected expropriating the assets of multinational energy companies operating in Bolivia’s gas sector, said he wanted foreign investment but under the principle that the state would be treated as an equal partner.

One of Mr Morales’s senior economic advisers said on Friday that Repsol and Total, two of the biggest foreign investors in the gas sector, had indicated they were prepared to drop a threat to take Bolivia to international arbitration over a hydrocarbons law that raised taxes on foreign investors.

Rafael Ramírez, Venezuela’s energy minister, said over the weekend that PDVSA, the Venezuelan state energy company, would help to develop the Bolivian gas reserves.

Mr Morales also addressed his campaign commitment to decriminalise cultivation of coca – raw material for cocaine – which had caused concern in the US, sponsor of eradication efforts in the Bolivian highlands. The new president vowed to clamp down on drug trafficking and cocaine production.

He said: “I want an agreement with the US to fight narcotrafficking, but the fight against drugs must not be an excuse for the US to dominate our people.”

Earlier, one of his advisers said two of the biggest investors in the gas sector had indicated they were prepared to drop a threat to take the country to arbitration over a hydrocarbons law that raised taxes on foreign investors.

Carlos Villegas, tipped as a cabinet minister, said Repsol and Total had signalled they were willing to renegotiate their contracts to give a greater share of profits to Bolivia.

That could make it more difficult for British Gas to carry out its threat to go to international arbitration. Petrobras has said it is prepared to accept lower profits.

Mr Villegas said that although Mr Morales had threatened during the presidential campaign to nationalise the hydrocarbons sector, the new government would respect the property rights of foreign investors.

The inauguration came a day after the investiture of the former coca growers’ leader in a ceremony at Tiwanaku, a pre-Inca ruin.

“Today begins a new era for the indigenous people of the world, a new life in which we seek equality and justice,” Mr Morales told a crowd of 20,000.

He vowed to “fight neo-liberalism” and to “complete the struggle of Che Guevara”.

Mr Morales’s campaign pledge to decriminalise coca cultivation has caused concern in the US, which sponsors eradication efforts.

Washington had refused to talk to Mr Morales directly, but there were signs of a thaw at the weekend when Thomas Shannon, US assistant secretary of state for western hemisphere affairs, visited the incoming president at his home in La Paz.

“We wish the new democratically elected government success,” Mr Shannon said afterwards. “We are ready to begin a process of dialogue to determine how our two governments can work together on a common agenda.” The new president has an approval rating of 74 per cent, according to a poll.

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