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Most editorials miss the point of Evo Morales's decision to nationalize
Bolivia's energy sector, just days after signing a trilateral socialist
trade pact (ALBA) with Cuba and Venezuela, countries that have little to
offer Bolivia.

To most observers, Morales's actions seem irrational because they will drive
away foreign investment and trade, as well as donor countries like the
United States. As a Los Angeles Times Editorial entitled "Unnatural
Disaster" puts it: "Evo Morales put his head in the oven and turned on the
natural gas." (see below).

The truth may very well be that creating a disaster is precisely what
Morales intends. He knows the risks of what he is doing and has decided
anyway to pauperize his country and declare economic war on Argentina and
Brazil, the main importers of Bolivian gas. Morales is moving in th
direction of a policy that can please no one but his mentor and master Hugo
Chaevz.

During the perilous days of Germany's post WW I Weimar Republic, overturned
along with democracy by radical nationalist and race-oriented extremists --
the Nazis -- in 1933, the Nazis had a clear plan to take power. Simply
put, the Nazi plan was to make Germany ungovernable, to the point where the
German people, fed up with democracy and anarchy, would call on them and
their Brownshirt methods. Hence the Nazi policy: "The worse the better!"

Morales has this Nazi plan in mind for Bolivia and the region, no doubt
incubated in discussions with Felipe Quispe, Bolivia's ultra-radical Inca
nationalist. Not for them is falling into the "trap" of reform and
cooperation with neighbors, international companies, and the UN agencies.
No, this is too prosaic, too slow, and not in the least heroic.

For Morales and Quispe, Bolivia today -- like Germany in 1933 -- needs a
bold new path of racial unity and domestic confrontations, both to
consolidate power at home and open new revolutionary opportinities and a
path to power and in the region. Why not extend the Inca Revolution by
merginng Bolivia and Peru, as Morales now desires? Anarchy, the more the
better.

So do not waste time in looking for logic or the outlines of an economic
strategy in these moves by Morales. His goal, along witth Hugo Chavez and
Felipe Quispe. is not to build the new but to destroy te old -- in a word,
Sabotage!

BOLIVIAN PRESIDENT EVO MORALES put his head in an oven this week and turned
on the natural gas. There are only two likely outcomes: an explosion that
ends his political career - or a slow suffocation for his people.
Morales' decision to nationalize Bolivia's energy sector was hardly
unexpected; he was elected in December after promising to do just that. But
it was a disappointment nonetheless to those who had hoped he'd follow the
path of wiser South American politicians such as Brazilian President Luiz
Inacio Lula da Silva, whose leftist rhetoric keeps supporters happy while
his more centrist policies keep the economy humming. Morales instead is
running into the arms of Cuba's Fidel Castro and Venezuela's Hugo Chavez, a
direction likely to impose a heavy cost on his impoverished nation of 9
million.

The problem with Bolivia is that it isn't Venezuela. The latter country
has gotten away with energy nationalization because it wields a lot of
power. As the world's fifth-biggest oil exporter, Venezuela is such a big
supplier that companies have little choice but to accede to its demands.
Bolivia has no such leverage. Its big resource is natural gas, which is
harder to transport than oil, so typically it stays in local markets. Most
of its gas exports go to Brazil, which recently discovered large domestic
reserves.

Foreign companies have long been wary about investing in Bolivia, especially
after the 2003 collapse of a project that should have assured a healthy
future for the country. Spanish and British oil companies had proposed a
$5-billion pipeline to carry natural gas from landlocked Bolivia to the
coast of Chile, where it would be liquefied and shipped to Mexico and
California. But the plan provoked furious protests in a Bolivian population
still angry at Chile for seizing what used to be Bolivia's coastline in the
19th century. Morales helped lead the protest movement.

After investing $3.5 billion in Bolivia's natural gas industry, foreign
companies are now likely to stop investing entirely unless Morales backs off
from his plan to seize 82% of gas production from the largest fields. Their
loss would be disastrous for Bolivia because its state-owned gas company is
in no position to extract and export the gas itself. Petrobras, Brazil's
state-owned energy company, has already suspended investment and said it
will look for alternative supplies for Brazil.

Paying the price for Morales' rashness will be the people who elected him,
and they can ill afford it; Bolivia is the poorest nation in South America.
It's true that the country's resources have long been exploited by
foreigners with little benefit to the indigenous population. But sending in
the army to take over the gas fields isn't the answer to Bolivia's problems.

Scott Sullivan is a former Washington goverment employee. Petroleumworld not necessarily share these views.

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