Bolivian Gas War

From Academic Kids

The Bolivian Gas War, also called the First Bolivian Gas War (after the 2005 Bolivia protests began to be referred to as the Second Bolivian Gas War) was a conflict in Bolivia centering around the exploitation of the country's vast natural gas reserves. The conflict, which was intensified by long-simmering grievances over the government's economic coca eradication policies and corruption as well as violent military responses against strikes, came to a head in October 2003. Strikes and road blocks mounted by indigenous and labor groups brought the country to a standstill, eliciting violent suppression from the Bolivian armed forces that left some 70 people dead.

The governing coalition disintegrated, forcing the president, Gonzalo Sánchez de Lozada, to resign and leave the country on October 18. He was succeeded by the vice president, Carlos Mesa, who put the gas issue to a referendum on July 18, 2004. In May, 2005, under duress from protesters, the Bolivian congress enacted a new hydrocarbons law, increasing the state's royalties from natural gas exploitation. However, protesters demanded full nationalization of hydrocarbon resources. On June 6, 2005, Mesa was forced to offer his resignation, as tens of thousands of protesters blockaded the capital city La Paz from the rest of the country daily.



The gas reserves were discovered in the mid-1990s and are located in the south-eastern Tarija Department, and are the second-largest in South America. To exploit the reserves, a consortium called Pacific LNG was formed by the British companies British Gas and British Petroleum, and Spain's Repsol-YPF. A plan costing some USD $6 billion was drawn up to build a pipeline to the Pacific coast, where the gas would be processed and shipped to Mexico and the United States. California, in particular, is a potentially big market for the gas, as it is planning to bring gas-fired power plants on-line in coming years to reduce emissions.

Government ministers point out the revenue from the gas will bolster the sagging Bolivian economy, and it will be invested exclusively in health and education. Opponents say the deal is a bad one for Bolivia; that the agreement with the consortium gives Bolivia only 18% of the future profits from the exportation of the gas and will only generate somewhere from $40 to $70 million per year. They further argue that exporting the gas will simply be the latest case of many centuries of exploitation of Bolivia's natural resources by foreigners, starting with silver and gold from the 17th century onward and tin in the 20th century. They are demanding a plant be built to process the gas in Bolivia and that 250,000 homes be supplied with gas before any of it is exported.

Via Chile or Peru

The dispute arose in early 2002, when the administration of President Jorge Quiroga proposed building the pipeline through neighboring Chile to the port of Mejillones, the most direct route to the Pacific ocean. However, antagonism towards Chile runs deep in Bolivia because of the loss of Bolivia's Pacific coastline to Chile in the War of the Pacific (1879-1884). Bolivians began vociferously campaigning against the Chilean option, arguing instead that the pipeline should be routed north through the Peruvian port of Ilo, 260 km further from the gas fields than Mejillones. According to Chilean estimates, the Mejillones option would be $600 million cheaper. Peru, however, claimed the difference in cost would be no more than $300 million. Bolivian proponents of the Peruvian option say it would also benefit the economy of the northern region of Bolivia through which the pipeline would pass.

Those in favor of the Chile option argue for accepting the deal as a best option, as Bolivia has no processing industries in place. US financiers, they say, are highly unlikely to put up more up-front costs to develop processing facilities within Bolivia.

Meanwhile, the Peruvian government, eager to promote "territorial and economic integration", has offered Bolivia a special economic zone for 99 years for exporting the gas at Ilo, the right of free passage, and the concession of a 10 km² area, including a port, that would be exclusively under Bolivian administration.

Shortly before leaving office, in July 2002, Quiroga postponed the decision in this highly contentious issue, leaving it for his successor; he was thought to have not wanted to jeopardize his chances of being elected president in the 2007 elections. Sánchez de Lozada, who won the 2002 presidential election, expressed his preference for the Mejillones option but made no "official" decision.

Evo Morales, the cocalero and leader of the Movement to Socialism (MAS) party — who finished a narrow second in the 2002 elections — is strongly opposed to having a foreign consortium export Bolivia's natural gas. He argued it should be used domestically to help Bolivia, the poorest country in South America.


The conflict escalated in September 2003 with protests and road blockages paralyzing large parts of the country, leading to increasingly violent confrontations with the Bolivian armed forces. The unrest was spearheaded by Bolivia's indigenous majority, who accuse Sánchez de Lozada of pandering to the US government's war on drugs and blame him for failing to improve living standards in Bolivia. On September 19, the National Coordination for the Defense of Gas mobilized 30,000 people in Cochabamba and 50,000 in La Paz to demonstrate against the pipeline. The following day, six Aymara villagers, including an eight year-old girl, were killed in a confrontation in the town of Warisata after government forces used planes and helicopters to circumvent the strikers to evacuate several hundred tourists stranded for five days in Sorata by road blockades.

In response to the shootings, Bolivia's Labor Union (COB) called a general strike on September 29 that paralyzed the country with road blockades. Union leaders insisted they would continue until the government backs down on its decision. Poorly armed Aymara community militias drove the army and police out of Warisata and the towns of Sorata and Achacachi. Eugenio Rojas, leader of the regional strike committee, declared that if the government refused to negotiate in Warisata, then the insurgent Aymara communities would surround La Paz and cut it off from the rest of the country — a tactic employed in the Túpaj Katari uprising of 1781. Another campesino leader who organized the road blockades, Felipe Quispe (also a member of Congress) stated that he would not participate in dialogue with the government until the military withdraws from blockaded areas. The government refused to negotiate with Quispe, claiming that he did not have the authority to represent the campesino movement.

As the protests continued, protesters in El Alto, a sprawling indigenous city of 750,000 people on the periphery of La Paz, proceeded to block key access routes to the capital, causing severe fuel and food shortages. They also demanded the resignation of Sánchez de Lozada and his ministers, Yerko Kukoc, Minister of Government, and Carlos Sánchez de Berzaín, Minister of Defense, who are thought to be responsible for the Warisata massacre. In addition to clamors for popular sovereignty over Bolivian gas, protesters also voiced their opposition to the Free Trade Area of the Americas, currently under negotiation by the U.S. and Latin American countries.

Faced with escalating civic unrest, Sánchez de Lozada complained in an interview with the BBC on October 1 that "they want to govern from the streets, not from parliament and within our institutions."

Martial law in El Alto

On October 12, the government imposed martial law in El Alto after sixteen people were killed and several dozen wounded in violent clashes which erupted when a caravan of oil trucks escorted by police and soldiers deploying tanks and heavy-caliber machine guns tried to breach a barricade.

On October 13, the administration of Sánchez de Lozada suspended the gas project "until consultations have been conducted [with the Bolivian people]." However, Vice President Carlos Mesa deplored what he referred to as the "excessive force" used in El Alto and withdrew his support for Sánchez de Lozada. The Minister of Economic Development, Jaime Torres, of the MIR party, also resigned.

The U.S. Department of State issued a statement declaring its support for Sánchez de Lozada, calling for "Bolivia's political leaders [to] publicly express their support for democratic and constitutional order. The international community and the United States will not tolerate any interruption of constitutional order and will not support any regime that results from undemocratic means."

On October 18, Sánchez de Lozada's governing coalition was fatally weakened when the New Republic Force party withdrew its support. He was forced to resign and replaced by his vice president, Carlos Mesa, a former journalist.The strikes and roadblocks were lifted.

Among his first actions as president, Mesa promised a referendum on the gas issue and appointed several indigenous people to cabinet posts. The gas referendum took place on July 18, 2004.

The New Hydrocarbons Law

On May 6 2005, the long awaited Hydrocarbons Law was finally approved by the Bolivian Congress. On May 17, Mesa failed to either sign or veto the Bolivian congress’ controversial Hydrocarbons Law, thus constitutionally requiring Senate President Hormando Vaca Díez to sign the measure and put it into effect.

The new law returns legal ownership to the state of all hydrocarbons and natural resources, keeps royalties at 18 percent, but increase taxes from 16 to 32 percent, gives the government control in the commercialization of the resources, allows for continuous government control with annual audits, and mandates companies to consult with indigenous groups when gas is found on their land. Protesters argue that the new law does not go far enough to protect the natural resource from exploitation by foreign corporations.

May 24 2005 More than 10,000 Aymara peasant farmers, from the twenty highland provinces, came down from El Alto's Ceja neighborhood into La Paz to protest.

On May 31 2005, residents of El Alto and the Aymara peasant farmers returned to La Paz. More than 50,000 people covered an area of nearly 100 square kilometers. The next day, the first regiment of the National Police decided, by consensus, not to repress the protests and have been internally reprimanded by the government.

Approximately half a million people mobilized in the streets of La Paz, on June 6. President Mesa offers his resignation. Riot police used tear gas, as miners amongst the demonstraters set off dynamite in clashes near the presidential palace, while a strike brought traffic to a standstill. The protesters are demanding the nationalisation of the gas industry. The demonstrators want reforms to give more power to the indigenous majority, who are mainly from the impoverished highlands.

See also

External links

fr:Guerre du gaz ja:ボリビアガス紛争 nl:Boliviaanse Gasoorlog


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